Forwards
Forwards Meaning:
In financial derivatives terminology, the term Forwards refers to a contractual transaction done for a value date other than the normal transaction value date, which would be value spot for foreign exchange forwards. Sometimes also called forward outrights, forward contracts generally involve buying or selling a currency or commodity scheduled for delivery at some specified value date in the future.
In financial derivatives terminology, the term Forwards refers to a contractual transaction done for a value date other than the normal transaction value date, which would be value spot for foreign exchange forwards. Sometimes also called forward outrights, forward contracts generally involve buying or selling a currency or commodity scheduled for delivery at some specified value date in the future.
For example, Foreign Exchange Forwards will often be dealt by first dealing value spot, and then performing a currency swap to roll the position out to the desired value date. Such Forwards will often be used by corporations looking to protect or hedge a known currency exposure due to occur in a certain amount on a specific date. Forwards generally trade in the over-the-counter market, so they can be transacted in customized amounts and value dates out to 10 years. Nevertheless, certain standard value dates provide greater liquidity in the short-term interbank forward market. These include: 1 month, 2 months, 3 months, 6 months, 9 months and 1 year delivery dates.