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 ?
The Fund also uses enhanced income strategies by engaging in dividend capture trading; option overwriting; and realization of gains on the sale of securities, dividend growth, and currency forwards.
One-year currency forwards show pressure for depreciation of the riyal near its lowest since late 2015, while three-month Saudi interbank money rates have dropped to their lowest since March 2016 as the modest improvement in state finances has allowed the government to spend more freely.
The insurgency in Iraq has not hurt overall market confidence in the Gulf; investors still see no direct impact on the Gulf Cooperation Council, where currency forwards and credit default swaps have not risen in response to Iraq.
Now the spotlight in financial markets is focusing on the currency forwards markets.
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.
The Fund also utilizes enhanced income strategies by engaging in dividend capture trading, option overwriting, and realization of gains on the sale of securities, dividend growth, and currency forwards.
Three-month onshore currency forwards traded at 56.
Finally, Section VI suggests for the way forward including possible measures to negate the shortcomings of the currency forwards.
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.