Currency Forward

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Currency Forward

An agreement between two parties to exchange a certain amount in currencies at a certain rate at a certain time. When a forward contract of any sort is made, terms are negotiated directly between the parties, unlike a futures contract, which trades on an exchange. Partly because there is little secondary market for forward contract, determining the forward price is a zero-sum game: one party will gain on the contract and one will lose. Thus, in a currency forward, each party believes that the prevailing exchange rate will move in a direction favorable to him/her by the expiry of the contract.
References in periodicals archive ?
Currency forward contracts are entered into between private parties off-exchange and are thus free from exchange regulations.
Currency forward contracts may be used to manage foreign investment risks.
The Company continued foreign currency hedging during the second quarter of 2009 using foreign currency forward contracts between the Euro and the US dollar, with the goal of mitigating, to some extent, the effects of exchange rate volatility.
To further mitigate future operating margin volatility associated with potential movement in the Indian rupee, the Company has adopted a foreign currency hedge program whereby the Company will enter into foreign currency forward contracts on a rolling eight quarter basis.
Some foreign currency forward contracts are less liquid, which may result in the Fund being unable to structure its hedging transactions as intended and may be unable to obtain sufficient liquidity in an underlying currency.
As a result, income before foreign currency forward contracts (gains)/losses, finance and income tax expenses of CAN 7.
These considerable factors include the use of short and long positions in commodity futures contracts, swaps, currency forward contracts and other derivatives.
Although the definition of a foreign currency contract provided in 1256(g)(2) may be read to include a foreign currency option contract, the legislative history of the Technical Corrections Act of 1982, which amended 1256 to include foreign currency contracts, indicates that the Congress intended to extend [section] 1256 treatment only to foreign currency forward contracts that are traded on the interbank market.
currency forward contracts (which lock in the price of a currency for settlement at a specified future date).
FX management traditionally has involved the purchase of currency forward contracts to achieve offsetting results (hedging) and debt management in local or home country currencies.
currency forward contracts, swaps, or other derivatives contracts on non-U.
Foreign currency forward contracts are a type of derivative contract whereby the Fund may agree to buy or sell a country's or region's currency at a specific price on a specific date in the future.