Adjust Currency Contract For Free

The fair value of a foreign currency forward contract is determined by reference to changes in the forward rate over the life of the contract, discounted to the present value.

A currency option is the right to buy or sell a foreign currency at a specified price by a specified date. Section 5.3 examines currency futures options. A currency futures option is the right to buy or sell a futures contract of a foreign currency at any time for a specified period.

Currency futures are futures contracts for currencies that specify the price of exchanging one currency for another at a future date. The rate for currency futures contracts is derived from spot rates of the currency pair. Currency futures are used to hedge the risk of receiving payments in a foreign currency.

Management can designate the forward contract as either a fair value or cash flow hedge of the foreign currencydenominated asset or liability because changes in spot rates affect both its fair value and its cash flows.

The forward rate is based on the difference between the interest rates of the two currencies (currency deals always involve two currencies) and the time until the maturity of the deal. Forward points are also known as the forward spread. Basis points can be either added or taken away from the spot rate.

Currency of the Contract means the currency in which the Contract Price is expressed.

A currency forward is a binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date. A currency forward is essentially a customizable hedging tool that does not involve an upfront margin payment.