This document is an agreement for a loan made in a foreign currency.

Foreign currency loans

Foreign currency loans are common where the borrower is involved in international transactions. For example, where an Australian retailer imports goods from a manufacturer based in another country, it might utilise an overdraft facility to pay for those goods. Practically in these circumstances, the borrower would direct the lender to transfer funds from the borrower’s overdraft facility to the bank account of the overseas manufacturer, the funds to take the form of the currency of the country in which the manufacturer is based.

Where loans are made in currencies other than the Australian dollar, the repayment terms of a loan transaction become much more complex as the parties need to consider various factors such as:

• whether repayment will be made in the same currency as the loan; and
• if repayment is to be made in a currency that is different from the currency used for the purposes of the loan, how the parties ensure on an objective basis that the loan transaction is not adversely affected due to fluctuations in currency, i.e. how the parties ensure that neither the lender or borrower are short changed.

Related precedents

• Basic loan agreement
• Guarantee of payment of loan
• General security deed
• Amendment and restatement agreement
• Deed of priority
• Real property mortgage
• Forbearance of debt agreement
• Deed of assignment of debt
• Loan agreement checklist

This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How.