FX Forward
Contract to exchange currencies at predetermined future rate.
FX forwards lock in exchange rates for future currency transactions, helping manage foreign exchange risk in international business.
Formula
Forward Rate = Spot Rate × (1 + r_quote × t) / (1 + r_base × t)Examples
- 3-month USD/EUR forward
- Hedging import costs
- Export receivables
Related Terms
- Spot Rate — Current market exchange rate for immediate delivery.
- Forward Points — Difference between forward and spot exchange rates.
- Currency Hedging — Strategies to protect against exchange rate fluctuations.