Dynamic forward contract: Difference between revisions
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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) |
imported>Doug Williamson (Layout.) |
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:<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.'' | ||
Latest revision as of 08:29, 15 October 2022
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
- Risk management
- Risk response
- Transfer
