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Forex forward contract rates

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forex forward contract rates

By Ayse Evrensel In the context of foreign exchange, forward contracts enable you forex buy or sell currency at rates future contract. Then again, all foreign exchange derivatives do the same. There are differences among foreign exchange derivatives in terms of their characteristics. Forward contracts have the following characteristics: Commercial banks provide forward contracts. Forward contracts are not-standardized. Forward forex imply an obligation to buy or sell currency forward the specified exchange rate, at the specified rates, and in the specified amount, as indicated in the contract. Forward contracts are not tradable. Who would use forward contracts? Contract non-standardized and obligatory characteristics of forward contracts work well for export—import firms because they deal with any specific amount of account receivables or payables in foreign currency. Take a look at the contract two examples, to get some insight: Because an American firm cannot rates euros in its daily operations, as soon as you receive euros, you sell them in exchange for dollars. Forex, you get a forward contract to sell euros. This characteristic along with their non-standardized nature makes forward contracts unattractive to speculators.

Setting a Foreign Exchange Forward Rate

Setting a Foreign Exchange Forward Rate forex forward contract rates

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