Forward and swap transaction

6 important questions on Forward and swap transaction

What is driving Foreign exchange prices:

  • Interest rate differential
  • Inflation differential
  • GDP growth differerential
  • Currency offer

What is the function of the foreign exchange market?

Assist clients in the conduct of international commerce

Contracting today for future purchase or sale of FX

Forward outright market
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When it is not possible to obtain currencies offshore in the spot market to settle a forward position

Non-deliverable forward

From who's standpoint is an outright forward transaction an uncovered speculative position in a currency

The bank

What provides means for the bank to mitigate currency exposure in a forward trade

Swap transaction

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