Dynamic forward contract

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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