FX Products Flashcards
Name some FX products
spot, option, Swap and Forward
What is a swap?
A foreign exchange swap is a contract under which two counterparties agree to exchange two currencies at a set rate and then to re-exchange those currencies at an agreed upon rate at a fixed date in the future.
What is a forward?
A foreign exchange outright forward is a contract to exchange two currencies at a future date at an agreed upon exchange rate.
What are the two types of forward contracts?
closed and open
What is a closed forward?
A closed forward contract allows a business to buy or sell a pre-determined sum of currency on a fixed date in the future.
What is an open forward?
An open forward contract gives a business flexibility to exchange currency at any time within the contract period up to the value date.
