Two options for buying the car are to buy a forward contract or invest in a bank abroad. The forward contract involves entering an agreement with the bank that you will pay the agreed amount at a future date. Investing in a foreign bank requires depositing money for three months to ensure the maturity is the same as the cost of the vehicle. It is recommended that you purchase a contract after careful consideration. This method offers several benefits.
Firstly, the strategy removes all exchange rate risks since the buyer can fix their price by entering into agreements of this type. Having already locked in their price, the buyer will be able to access it instantly after completion. This is a great convenience. By utilizing these contracts, buyers can also realize arbitrage profits by taking advantage.
The flexibility of forward contracts and their ability to offer certainty about pricing are two reasons why they can be beneficial when purchasing large items such as automobiles.