publication . Article . 1998

Forward contract - minimize the exchange risk

Martin Maršík; František Vebr;
Open Access
  • Published: 01 Jan 1998
Abstract
How can a Czech export (import) company hedge exchange risk? Some of the possibilities are these: 1/ use only CZK for foreign contracts; 2/ matching payments in the same or a parallel currency; 3/ use the products of the money markets; 4/ use the products of the forward market - FORWARD CONTRACT The forward market offers a forward contract to buy or sell a fixed amount of currency at a fixed price on a specific date in the future. The settlement of the contract is in more than two days. The export and import companies can then use the forward rate in this financial estimate (budged). The advantage of the forward contract for an exporter: The exporter is expectin...
Subjects
free text keywords: market; rate; forward contract; forward points
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