Dynamic forward contract: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Create page - sources - The Treasurer online - https://www.treasurers.org/hub/treasurer-magazine/corporates-act-mitigate-fx-volatility - Iban first - https://blog.ibanfirst.com/en/what-is-a-dynamic-forward-contract) |
(Improve linking.) |
||
| (One intermediate revision by one other user not shown) | |||
| Line 15: | Line 15: | ||
:<span style="color:#4B0082">'''''Corporates act to mitigate FX volatility'''''</span> | :<span style="color:#4B0082">'''''Corporates act to mitigate FX volatility'''''</span> | ||
Payment fintech Moneycorp suggests a number of ways in which corporates can mitigate the impact of FX exposure... | :Payment fintech Moneycorp suggests a number of ways in which corporates can mitigate the impact of FX exposure... | ||
Make use of forward contracts: Forward contracts, either fixed or dynamic, can be customised to allow companies to lock an exchange rate for a future overseas payment. | :Make use of forward contracts: Forward contracts, either fixed or dynamic, can be customised to allow companies to lock an exchange rate for a future overseas payment. | ||
:''Philip Smith, editor, The Treasurer online - 14 October 2022.'' | :''Philip Smith, editor, The Treasurer online - 14 October 2022.'' | ||
| Line 43: | Line 43: | ||
* [[Futures contract]] | * [[Futures contract]] | ||
* [[Hedging]] | * [[Hedging]] | ||
* [[Open forward contract]] | |||
* [[Risk management]] | * [[Risk management]] | ||
* [[Risk response]] | * [[Risk response]] | ||
* [[Transfer]] | * [[Transfer]] | ||
[[Category: | [[Category:Financial_products_and_markets]] | ||
[[Category:Identify_and_assess_risks]] | [[Category:Identify_and_assess_risks]] | ||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
[[Category:Risk_reporting]] | |||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
[[Category: | [[Category:The_business_context]] | ||
Latest revision as of 19:44, 22 February 2025
Risk management - foreign exchange.
A dynamic forward contract is a foreign exchange forward contract that provides additional flexibility to the party hedging its foreign exchange risk.
This effectively provides an option - or options - in favour of the hedger.
The option may be paid for by:
- An up front premium;
- An adverse forward rate in the contract, compared with the current market forward rate; or
- A combination of these.
- Corporates act to mitigate FX volatility
- Payment fintech Moneycorp suggests a number of ways in which corporates can mitigate the impact of FX exposure...
- Make use of forward contracts: Forward contracts, either fixed or dynamic, can be customised to allow companies to lock an exchange rate for a future overseas payment.
- Philip Smith, editor, The Treasurer online - 14 October 2022.
See also
- Bilateral
- Contract
- Deal contingent forward
- Derivative instrument
- Fixed forward contract
- Fixing instrument
- Foreign exchange forward contract
- Foreign exchange risk
- Forward contract
- Forward discount
- Forward exchange market
- Forward foreign exchange rate
- Forward margin
- Forward market
- Forward points
- Forward premium
- Forward price
- Forward rate
- Futures contract
- Hedging
- Open forward contract
- Risk management
- Risk response
- Transfer
