Foreign exchange forward contract and Foreign exchange rate: Difference between pages

Latest revision as of 14:32, 11 May 2016

The price for a foreign exchange transaction.

Also known as the foreign currency exchange rate.

Relevant accounting standards include Section 30 of FRS 102.

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-A transaction which solely involves the exchange of two different currencies:
+The price for a foreign exchange transaction.
-#on a specific future date
+Also known as the ''foreign currency exchange rate''.
-#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.
+Relevant accounting standards include Section 30 of FRS 102.
-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.
-Both of the parties to the forward contract are committed to the exchange.
-A forward contract differs in this respect from an option. In an option contract, only the option writer is committed.
-Also known as a Forward foreign exchange contract, or a Foreign exchange forward.
 == See also ==
-*[[Contract]]
+* [[Cross rates]]
-* [[Deal contingent forward]]
+* [[Foreign exchange]]
-* [[Forward contract]]
+* [[Forward foreign exchange rate]]
-* [[Hedging]]
+* [[FRS 102]]
-* [[Non-deliverable forward]]
+* [[Interest rate]]
-* [[Option]]
+* [[Price]]
-* [[Synthetic]]
 [[Category:Manage_risks]]