Forward points: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Expand.)
imported>Doug Williamson
(Layout.)
Line 30: Line 30:




It is also often possible for a customer to construct a forward FX contract, by dealing separately in the spot FX deal and the swap points.
''It is also often possible for a customer to construct a forward FX contract, by dealing separately in the spot FX deal and the swap points.''





Revision as of 14:30, 30 May 2016

Forward points (for example one month forward points of 5-8) are a conventional short-form method of quoting forward foreign exchange (FX) rates, by reference to the related foreign exchange spot quote.

The spot foreign exchange quote is adjusted by applying, for example, the one-month forward points to it, to calculate the full one month forward foreign exchange quote.


Example: Full forward quote calculation

If the spot foreign exchange quote is:

GBP 1 = 1.6000 - 1.6010 USD


And if one-month forward points are 5-8 (rising).


Then the one-month forward exchange quote is calculated by adding the forward points as follows:

1.6000 + 0.0005

= 1.6005 USD

1.6010 + 0.0008

= 1.6018 USD


The full forward quote (bid-offer) is:

GBP 1 = 1.6005 - 1.6018 USD.


It is also often possible for a customer to construct a forward FX contract, by dealing separately in the spot FX deal and the swap points.


See also