Buying yearlings at the upcoming New Zealand Bloodstock (NZB) Ready to Run Sale at Karaka offers great value in our opinion. But it also poses another challenge for Trainers purchasing - foreign exchange risk.
The same risk applied to trainers purchasing yearlings earlier in the year.
Between the start of the NZ Karaka yearling sale in late January, and mid April when most payments were due to NZB, the Australian Dollar depreciated by more than 4% compared to the New Zealand Dollar.
One NZD was worth only AUD0.90 on 28 January. But on the 31st of January that currency exchange rate started to change rapidly to AUD0.912, then climbing to AUD0.945 by mid April.
Unprepared buyers were faced with thousands of dollars of foreign exchange losses, depending on when they pay NZ Bloodstock for their purchase.
But it doesn't have to be that way.
Our Syndication Compliance Service utilises a foreign currency exchange provider to access competitive rates and create forward contracts to "fix" the rate and avoid foreign currency risk.
By the time we paid NZB on behalf of Trainers for the horses syndicated using our financial service, we saved Trainers and/or Owners between 1.5% and 3.5%, by locking in the exchange rate for them.
The actual foreign exchange rate accessed depended on when we set the forward contract for.
The savings are even more significant when compared to the average exchange rate offered by the major banks. Our chosen foreign currency exchange partner has allowed us to convert NZD to AUD at a rate that is approximately 2% cheaper than the banks offer.
Another value-adding service we provide when you utilise our Syndication Compliance service.