Forward exchange

Forward exchange

A type of foreign exchange transaction whereby a contract is made to exchange one currency for another at a fixed date in the future at a specified exchange rate. By buying or selling forward exchange, businesses protect themselves against a decrease in the value of a currency they plan to sell at a future date.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The NBU is entitled to terminate a swap transaction and recalculate the forward exchange rate at which the second leg of the swap transaction is settled.
The development is expected because of near-record activity in the forward exchange market and other supporting factors.
Business owners and corporate treasurers will now be able to set a forward exchange rate at a specified date and then choose whether to use the pre-agreed amount or to reconsider given current market conditions.
The government limits forward exchange positions at 40 percent of equity capital for local banks and 200 percent for branches of foreign banks.
When it comes to hedging through forward exchange contracts, people who are on salaried employment are disadvantaged because the amounts at their disposal are too small to meet the minimum limits.
A reverse exchange allows you to take advantage of these tax benefits in situations where a forward exchange would be impracticable.
Nakagawa noted that companies have yet to sign forward exchange contracts for next April and subsequent periods.
Risk strategies: Monsanto handles market risk related to interest foreign currency rates and commodity prices by engaging in various derivative transactions, including foreign currency forward exchange contracts and foreign currency options
Similarly, another company was unsuccessful in its appeal (43) that its sales-factor denominator should include proceeds from short-term investment sales and gains from forward exchange contracts.
First, we consider an alternative method of calculating the currency risk premium using forward exchange rates.
Some of the products available from the Commonwealth Bank include Forward Exchange Contracts, a 24-hour Market Watch service, Foreign Currency Options, or Flexible Forward Contracts.

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