EXAMPLE: - Sale of aircraft equipment to Canada Your company agrees to sell aircraft parts to Canada for $500,000 CD (Canadian Dollars). The buyer issues a 90-day letter of credit in your favor. Terms of the letter of credit only call for payment after the goods are shipped; therefore, you will not receive payment for 90 days. To secure the US Dollar equivalent, you sell the Canadian Dollars to California Bank & Trust with a settlement date of 90 days in the future. Should the Canadian Dollar have a lower rate of interest than the US Dollar over the same time period, a better rate of exchange is shown for the conversion of your Canadian dollar. You would benefit, in effect, from holding a lower yielding instrument (the Canadian Dollars) for that 90-day period. At maturity, you would transfer the Canadian Dollars to California Bank & Trust's Canadian account and your account would be credited with US Dollars.
Foreign Exchange
Products and Services
Foreign
Exchange Services
Spot
Contracts
Forward
Contracts
Window Forward
Contracts
International Check Clearing
Foreign Draft Issuance
International Wire Transfers
Currency Notes
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Risk Profile of This Exposure