Exchange and Foreign exchange forward contract: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Add link.)
 
imported>Kmacharla
No edit summary
 
Line 1: Line 1:
1. ''Investment - trading.''
A transaction which solely involves the exchange of two different currencies:


A traditional exchange is an open and organised marketplace in which commodities, securities or other financial instruments are traded.
<p>(i) on a specific future date


Examples include stock exchanges such as the London Stock Exchange.
(ii) at a fixed foreign exchange rate which is pre-agreed at the outset of the contract.</p>


Foreign exchange forward contracts are used - among other purposes - for hedging forward foreign exchange exposures.
For example known or likely future currency receivables and payables.


2. ''Investment - trading - other intermediaries.''
They are priced by adjusting the spot foreign exchange rate to reflect the interest rate differential between the two currencies involved for the forward period.


More broadly, any intermediary that facilitates a broad range of economic activities, and including intermediaries that may be less well-organised, and less secure for participants.
For example, cryptoasset exchanges.
3. ''Foreign currency.''
Relating to transactions between different currencies.
4. ''Financial and commercial transactions.''
Relating to a two-way flow of money or other value.
Contrasted with a one-way flow, such as a remittance.


Also known as a Forward foreign exchange contract, or a Foreign exchange forward.


== See also ==
== See also ==
* [[Commodity]]
* [[Hedging]]
* [[Cryptoasset exchange]]
* [[Non-deliverable forward]]
* [[Exchange controls]]
* [[Synthetic]]
* [[Exchange creditors]]
* [[Exchange-for-value system]]
* [[Exchange rate]]
* [[Exchange traded]]
* [[Exchange Traded Commodity]]
* [[Exchange-traded funds]]
* [[Financial instrument]]
* [[Foreign currency]]
* [[Foreign exchange]]
* [[Intermediary]]
* [[Remittance]]
* [[Security]]
* [[Stock exchange]]
* [[World Federation of Exchanges]]
 
[[Category:The_business_context]]
[[Category:Investment]]
[[Category:Financial_products_and_markets]]

Revision as of 12:35, 5 December 2012

A transaction which solely involves the exchange of two different currencies:

(i) on a specific future date (ii) at a fixed foreign exchange rate which is pre-agreed at the outset of the contract.

Foreign exchange forward contracts are used - among other purposes - for hedging forward foreign exchange exposures. For example known or likely future currency receivables and payables.

They are priced by adjusting the spot foreign exchange rate to reflect the interest rate differential between the two currencies involved for the forward period.


Also known as a Forward foreign exchange contract, or a Foreign exchange forward.

See also

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Exchange&oldid=21741’