Forward exchange rate


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Forward exchange rate

Exchange rate fixed today for exchanging currency at some future date.

Forward Foreign Exchange Rate

The agreed-upon exchange rate for a forward contract on a currency. When a forward contract is made, the parties agree to buy/sell the underlying currency at a certain point in the future at a certain exchange rate. The rate is negotiated directly between the parties, unlike a futures contract, which trades on an exchange. Partly because there is little secondary market for forward contracts, determining the forward foreign exchange rate is a zero-sum game: one party will gain on the contract and one will lose, depending on the movements of the relevant currencies between the formation of the contract and its maturity.
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References in periodicals archive ?
Forward exchange rate contracts are used, among other things, to eliminate future spot exchange rate risk.
Liquidity, information and the size of the forward exchange rate bias
Therefore, the forward exchange rate can be expressed as:
Currency choices in valuation: an approach for emerging markets
* Agree today to exchange these 108,694.85 PKR 90 days from now at the 90-day forward exchange rate of 107.58 PKR per dollar, or for a total of $1010.363.
WHY PAK RUPEE IS DEPRECIATING?
With a forward hedge, a firm can effectively eliminate foreign exchange risk by locking in the price of foreign currency (i.e., the forward exchange rate) at which the contractual amount is to be sold or bought.
Relationship between the market deviation from the interest rate parity and the net working capital decision of the U.S. multinational corporations
(13.) Substituting other available forward exchange rate contracts extending out to 12 months, or even the simple change in the spot exchange rate itself, had no effect on the inferences drawn from the regression analysis below.
Cross-market trading in China's large state-owned commercial banks. 2006-2011
Equation (4) implies directly that the forward exchange rate is equal to the market expectations of the future spot exchange rate.
Foreign exchange market efficiency. Empirical results for the USD/EUR market
A., The Forward Exchange Rate, Expectations and the Demand for Money : The German Hyperinflation, American Economic Review (67: 1997)
Is the forward rate for the Greek drachma unbiased? A VECM analysis with both overlapping and non-overlapping data
Additionally, Glyndwer wanted to mitigate project exchange risks - and the risks of cost overruns - so entered into a range of forward exchange rate contracts with RBS CIB.
pounds 1bn project is aiming for stars
Assuming that the interest rate parity holds, the forward exchange rate will be 97.28 yen/dollar.
Budgeting for international operations: impact on and integration with strategic planning
(5) The 'puzzle' is why does the forward exchange rate (that is, the exchange rate quoted today for the delivery and payment of funds on a future date) give biased forecasts of the spot exchange rate that will occur on the settlement date.
The New Zealand dollar through the global financial crisis
The modern approach to forward exchange rate determination suggests that the equilibrium forward exchange rate is determined by the actions of two groups, arbitrageurs and speculators.
An empirical test of the interest rate parity: does it hold between U.S.A and selected emerging Asian economies?
Interest payments are made semi-annually for the US dollar denominated bond versus annually for the Eurobond offerings, but the primary difference would be the coupon rate (7% for the straight Eurobond, 7.5% for the dual currency Eurobond, and 8% for the US dollar bond) and corresponding forward exchange rate. Both Eurobond offerings would have lower annual coupon payments relative to the US dollar bond which has a constant annual payment of $4.125 million.
Accessing international capital markets at SLC.(Instructor's Note)

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