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13
Nov

What is a Swap Agreement

A swap agreement is a derivative transaction with foreign currency. This fixed negotiated trade with foreign currency is composed of two parts. The trade results in the immediate purchase or sale of funds in currency A for a specific amount of funds in currency B. The purchase or sale of the funds in currency B for a certain amount […]

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10
Nov

What is a Window Forward Contract

Window Forward contracts are based on the same principle as forward contracts, i.e. a precisely defined amount insured by a fixed exchange rate, with the sole exception that the settlement date is variable. The settlement date agreed in advance with a forward is replaced by a three- week interval (1 week before and 2 weeks after the settlement date), during which the […]

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10
Nov

What is a Currency Option

A CURRENCY OPTION is a financial instrument for hedging against risks that may arise from potentially negative developments in a currency pair. It also gives clients the possibility of profiting from positive developments in the forex market.  When buying CURRENCY OPTIONS, the client has the option to buy or sell the given currency at a pre-agreed exchange rate […]

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10
Nov

Non-Deliverable Forward Contracts

Much like a Forward Contract, a Non-Deliverable Forward lets you lock in an exchange rate for a period of time. However, instead of delivering the currency at the end of the contract, the difference between the NDF rate and the fixing rate is settled in cash between the two parties. This is useful when dealing […]

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10
Nov

What is a Flexible Forward

A flexible forward is a type of forward contract used to hedge against the volatility generated by foreign exchange. Characteristics of the flexible forward   Flexible forwards differ from a standard currency forward contract in that the purchaser can settle at any time up to the maturity date of the flexible forward contract. They may […]

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10
Nov

Outright Forward

“Outright forward”   Definition The outright forward is the simplest type of foreign exchange forward contract. It defines an exchange rate with fixed forward points and a future delivery date. An outright forward contract allows the purchaser to buy or sell a currency either on a specific date or within a range of dates. Companies […]

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