Forward exchange contracts

These refer to a contract to buy or sell a currency at a fixed exchange rate with delivery made on a given date or dates in the future.

Forward exchange contracts enable business with large import or export markets to mitigate the effects of currency fluctuations by providing and assured exchange rate. They can also be used speculatively by investors to ‘bet’ on future exchange rate levels.

Forward exchange contracts is a term normally found in financial management.

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