In international trade, creating contracts that are clear, secure, and legally binding is key to safeguarding the interests of the involved parties (exporter-seller and importer-buyers). Essentially, this agreement sets out the rights and obligations of the parties and the remedies for breach.
Foreign exchange refers to exchanging the currency of one country for another at prevailing exchange rates.
A forward exchange contract, commonly known as a FEC or forward cover, is a contract between a bank and its customer, whereby a rate of exchange is fixed immediately, for the buying and selling of one currency for another, for delivery at an agreed future date.