What Is a Forward Transaction?
Forward Transaction (Forward Transaction) refers to a type of transaction in which a buyer and a seller sign a forward contract, stipulating that the transaction will be carried out in a certain period in the future.
Forward transaction
Right!
- Chinese name
- Forward transaction
- Foreign name
- Forward Transaction
- Explanation
- Prescribe transaction methods for future transactions
- Application
- Foreign exchange market
- Forward Transaction (Forward Transaction) refers to a type of transaction in which a buyer and a seller sign a forward contract, stipulating that the transaction will be carried out in a certain period in the future.
- Forward transactions in the foreign exchange market are usually expressed as the difference above (premium) or below (discount) the spot exchange rate. To get the actual forward foreign exchange price, simply add the difference to the spot exchange rate.
- In the foreign exchange market, the tool for forward business is a fixed format and binding contract. According to the contract, the investor agrees to purchase or sell an agreed amount of another currency at a future date. The calculation of the transaction price is based on the spot exchange rate, and an adjustment is made according to the trend of the interest rate between the effective date of the contract and the completion of the transaction. Forward transactions are good for investors who need special transactions, but they have disadvantages because forward transactions cannot be transferred.
- Forward foreign exchange transactions, also known as forward exchange transactions, are foreign exchange transactions that are reserved for purchase and sale, that is, the buyer and the seller first sign a contract that stipulates the currency, amount, exchange rate and future delivery time of the purchase and sale of foreign exchange. Then according to the contract, the seller exchanges and the buyer pays for the foreign exchange business.
- Forward transactions in securities transactions refer to the parties agreeing to conduct transactions at a certain future time (or time period) at the price determined now.
- The forward transaction object is a non-standardized contract reached through private negotiation between the two parties in the transaction. It mainly adopts the method of commodity settlement and has high credit risk.