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 ?
Focusing on developed-market foreign currency forwards and short-duration fixed income securities, the fund seeks to generate returns with low correlation to major asset classes.
One-year Qatari riyal currency forwards, which have been pushed up by the Syrian crisis, continued to climb on Tuesday, reaching 180.
This fuelled speculation in the currency forwards market, which ultimately proved incorrect, that they might have to abandon their pegs.
The fund utilises currency forwards with a directional bias in the “carry” component of the strategy.
Three-month onshore currency forwards traded at 56.
The unit's chief investment officer, Guy Williams, said that the company was using credit-default swaps and currency forwards to protect against losses in euro-denominated securities.
Saudi currency forwards hit their weakest in two years on Tuesday as stocks tumbled and investors sought protection following widespread unrest in the Arab world.
Saudi stocks have suffered from the jitters, slipping to nine-month lows this week, while Saudi currency forwards are near their weakest levels in two years.
In his new role, Underwood will be based in New York and will assume responsibility for currency forwards and options during New York trading hours.
Traders, though, said Gulf currency forwards were unlikely to go much higher in the short-term with resistance felt around current levels unless the regional political situation gets more dense.
Other Gulf currency forwards are also pricing in larger appreciations after Central Bank Governor Sultan Nasser Al Suweidi's remarks in Tokyo.
Many simple derivatives, such as futures, options and currency forwards, have been around for more than 20 years.