Forward rate agreement

(redirected from Future Rate Agreement)

Forward rate agreement (FRA)

Agreement to borrow or lend at a specified future date at an interest rate that is fixed today.

Forward Rate Agreement

An agreement between two parties to exchange two currencies or interest rates at a given rate at some point in the future. A forward rate agreement mitigates foreign exchange risk or interest rate risk for the parties. It is most useful when both parties have operations or some other interest in a country using a given currency or investment vehicle with a floating interest rate. Forward rate agreements are over-the-counter contracts and are also called future rate agreements.
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