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Spot Contracts

What are Spot Contracts?
The Spot Contract is the most basic and popular foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You settle the contract the same day, at a price based on the prevailing “spot exchange rate” – the current value of one currency compared to another.

What are the benefits/risks?
Although the spot market lets your company buy or sell currency as you need it, spot exchange rate movements are highly unpredictable, even during a single trading day. Relying on the spot market for future foreign currency requirements is highly speculative. It can expose your company’s cash flow to the risk of unfavorable changes in foreign currency values.

An example
You purchased inventory from a company in the United States and payment is due in three months. You decide to wait until the closing day to purchase U.S. funds at the prevailing spot exchange rate.

Forward Contracts

What are Forward Contracts?
A Forward Contract allows you to buy or sell one currency against another for settlement in the future at a predetermined rate and date.

Unlike Spot Contracts, a Forward Contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future. This is called hedging your expected foreign currency transactions.

What are the benefits/risks?
Predicting and protecting your future cash flow can eliminate some of the uncertainty of doing business abroad. You are protected against unfavorable movements in the foreign exchange market; however you will not have the opportunity to participate in favorable currency movements.

An example
You purchased inventory from a company in the United States and payment is due in three months. You decide to book a Forward Contract for settlement in three months which locks in the exchange rate now.

Treasury Bonds

What are Treasury Bonds?
An investment instrument issued by the Central Bank of Sri Lanka, what offers a fixed rate of interest over a fixed period of time. Many people find these bonds attractive because they are not subject to income taxes.

What are the benefits/risks?
Treasury Bonds have zero default risk because every aspect of the investment is guaranteed by the Government, regardless of the size of the investment.

Eligibility
a. Resident individuals.
b. Corporate bodies incorporated in Sri Lanka.
c. Foreign institutional investors including country funds, regional funds or mutual funds.
d. Corporate bodies incorporated outside Sri Lanka.
e. Citizens of foreign states whether residing in Sri Lanka or outside Sri Lanka.
f. Nonresident Sri Lankans are eligible to apply for Treasury Bonds.

If you fall in to the category of investors from “c” to “f” as mentioned above, you should invest through Securities Investment Account and securities will be allocated for same after inquiring the availability in the leeway from the Central Bank.

Placing a Treasury Bond
You can visit a branch of your choice and discuss your requirement with an officer.

Interest rate applicable for Treasury Bonds can be viewed through the rates and tariffs page of this site. Please fill the relevant application form and hand it over to the branch. Remember to take your national identity card, driving license or passport. This is necessary for us to identify you.

Withdrawals

Once a formal request is forwarded to the Treasury Department, your Treasury Bills will be discounted based on the market rates.

Terms & conditions apply
Product information and terms & conditions are subject to change from time to time.
Therefore, it is advisable to contact the branch nearest to you for the latest information and prevailing terms & conditions.

Treasury Bills

What are Treasury Bills?
A short-term debt obligation backed by the Central Bank of Sri Lanka, which offers a fixed rate of interest with a maturity of less than one year. Many people find these bonds attractive because they are not subject to income taxes.

What are the benefits/risks?
Treasury Bills have zero default risk because every aspect of the investment is guaranteed by the Government, regardless of the size of the investment.

Eligibility
a. Resident individuals.
b. Corporate bodies incorporated in Sri Lanka.
c. Foreign institutional investors including country funds, regional funds or mutual funds.
d. Corporate bodies incorporated outside Sri Lanka.
e. Citizens of foreign states whether residing in Sri Lanka or outside Sri Lanka.
f. Nonresident Sri Lankans are eligible to apply for Treasury Bonds.

If you fall in to the category of investors from “c” to “f” as mentioned above, you should invest through Securities Investment Account and securities will be allocated for same after inquiring the availability in the leeway from the Central Bank.

Placing a Treasury Bill
You can visit a branch of your choice and discuss your requirement with an officer.

Interest rate applicable for Treasury Bonds can be viewed through the rates and tariffs page of this site. Please fill the relevant application form and hand it over to the branch. Remember to take your national identity card, driving license or passport. This is necessary for us to identify you.

Withdrawals

Once a formal request is forwarded to the Treasury Department, your Treasury Bills will be discounted based on the market rates.

Terms & conditions apply
Product information and terms & conditions are subject to change from time to time.
Therefore, it is advisable to contact the branch nearest to you for the latest information and prevailing terms & conditions.

Repo & Reverse Repo

What is Repo & Reverse Repo?
A short-term borrowing where bank agrees to borrow funds against Treasury Bills or Bonds from a customer for a specified period at an agreed rate of interest. The dealer sells the government securities to investors, and buys them back on maturity.

For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction, (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement.

What are the benefits/risks?
Liquidity – Repos provide the ability to invest cash overnight, making them a critical component in the effort to manage liquidity.

Yield Advantage – Repos generally provide additional yield as compared to traditional money market instruments.

Flexibility – the principal amount of repos can be adjusted up or down as fund cash flows dictate.

Eligibility
Individual customers and Corporate Bodies incorporated in Sri Lanka who maintains a Savings or Current Account at Cargills Bank can purchase REPOs.

Placing a Repo & Reverse Repo
You can visit a branch of your choice and discuss your requirement with an officer.

Interest rate applicable for REPOs can be viewed through the rates and tariffs page of this site. Please fill the relevant application form and hand it over to the branch. Remember to take your national identity card, driving license or passport. This is necessary for us to identify you.

Terms & conditions apply
Product information and terms & conditions are subject to change from time to time.
Therefore, it is advisable to contact the branch nearest to you for the latest information and prevailing terms & conditions.

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