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Forward exchange rate

   Also found in: Wikipedia 0.01 sec.
Forward exchange rate
Exchange rate fixed today for exchanging currency at some future date.

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With the market approach, you let forward exchange rates and your observations on currency volatility guide your choices.
Most firms grossly overestimate the cost of hedging their foreign exchange exposure; the effective comparison is between today's forward exchange rate and the estimate of the spot exchange rate on the date the forward exchange contract matures, for an extended series of transactions.
To manage foreign exchange risk, large and small companies alike must effectively gather and digest a large volume of information, including spot and forward exchange rates, currency conversion and funds transfer fees and government regulations regarding allowable transactions and currency controls.
 
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