Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, modifies the accounting and reporting of foreign currency forward
contract hedges of recognized assets and liabilities denominated in a foreign currency.
* Foreign Currency Forward
Contract: On September 18, 2018, the Company entered into a foreign currency forward
contract in the amount of [euro]1.625 billion related to the anticipated cash portion of the purchase price of EHG.
This means that future movements in currency rates are offset, for example, by buying currency forward
at a favourable rate today in the expectation that currency shifts will be worse by the time you need to make payments in that currency.
However, the bank's capital position remains vulnerable and is significantly undermined by (i) sizable unreserved non-performing loans (NPLs; loans 90+ days overdue) and accrued interest on them equalling to AZN69m, or 4.3x of the estimated FCC; (ii) weak core profitability (the bank has been loss-making on a cash basis for several years and return to break-even performance is unlikely in the near term); and (iii) the AZN40m receivable (2.5x the estimated FCC) from AGB's shareholders and key customers recognised as a fair value of non-deliverable foreign currency forward
"This is particularly relevant during periods of extreme market conditions, when execution generally becomes less efficient and execution risk in the FX market remains relatively low particularly for G10 currency forward
However, the recent sharp decline of oil prices has fuelled speculation in the currency forward
markets about possible devaluation of GCC currencies, QNB said.
On occasion, however, when the interest rate or currency markets are agitated, currency forward
points can swing unexpectedly.
The Philippines is one of the few Asia Pacific countries that use NDFs, a short-term, cash-settled currency forward
between two counterparties.
The currency forward
transactions contain the elements of riba since the parties involved wish to exchange currency sometime in future but the rate is fixed today.
FOREIGN CURRENCY FORWARD
planning pays off when exchanging money, as it will give you time to shop for the best rate.
As a result, income before foreign currency forward
contracts (gains)/losses, finance and income tax expenses of CAN 7.0m decreased CAN 591k, or 8%.
Bank of Korea (2008), 'Preliminary findings of study on demand and supply imbalance in the currency forward
market' (in Korean), Bank of Korea Press Release 2008-1-41, 19 January.