Forward currency contract

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Forward currency contract

An agreement to buy or sell a country's currency at a specific price, usually 30, 60, or 90 days in the future. This guarantees an exchange rate on a given date.

Forward Currency Contract

An agreement between two parties to exchange two currencies at a given exchange rate at some point in the future, usually 30, 60, or 90 days hence. A forward currency contract mitigates foreign exchange risk for the parties and is most useful when both parties have operations or some other interest in a country using a given currency. Forward currency contracts are over-the-counter contracts.
References in periodicals archive ?
ASC Topic 815, "Derivatives and Hedging," requires companies to measure foreign currency forward contracts at fair value, derived by discounting the difference between the contract rate and the current forward rate to the settlement date.
The change in fair value of a foreign currency forward contract designated as a fair value hedge is recognized currently in earnings in the same line of the income statement as the foreign currency exchange gain or loss on the underlying asset or liability.
They also invest in their unhedged parent ETFs--iShares MSCI EAFE (EFA), Germany (EWG) and Japan (EWJ)-- and implementing foreign currency forward contracts, the hedged ETFs provide a way to mitigate unwanted currency risk.
By investing in their related unhedged, parent iShares ETFs (EFA, EWG and EWJ) and implementing foreign currency forward contracts, iShares Currency Hedged ETFs provide an easy and cost-effective way to mitigate unwanted currency risk.
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%.
Moreover, Field Service Advice (FSA) 200025020 (issued prior to Notice 200381, which was modified and supplemented by Notice 2007-71) provided the following reasoning: Although the definition of a foreign currency contract provided in 1256(g)(2) may be read to include a foreign currency option contract, the legislative history of the Technical Corrections Act of 1982, which amended 1256 to include foreign currency contracts, indicates that the Congress intended to extend [section] 1256 treatment only to foreign currency forward contracts that are traded on the interbank market.
Oracle The company has established a program that uses primarily foreign currency forward contracts to offset risks associated with the effect of foreign currency exposures and to hedge net assets of some international subsidiaries.
Foreign Currency Forward Contracts for Forecasted FX Transactions
The accounting for cash flow hedges for forecasted FX intercompany transactions was previously discussed by the authors in the October 2010 CPA Journal (Josef Rashty and John O'Shaughnessy, "Foreign Currency Forward Contracts and Cash Flow Hedging: Navigating Accounting and Disclosure Requirements").
Risk strategies: Foreign currency forward contracts, interest rate swaps, commodity swaps.
Companies use foreign currency forward contracts to hedge against changes in currency exchange rates of an existing asset or liability, a firm commitment, or a forecasted transaction.
Therefore, gain or loss arising from a disposition or settlement of a foreign currency forward contract generally ought to be ordinary in character, regardless of whether the contract represents a foreign currency contract under Sec.

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