# Forward transaction in foreign exchanges

- Canonical URL: https://www.gerhardmerk.de/forward-transaction-in-foreign-exchanges
- Post ID: 591594
- Modified: 2023-07-25T21:01:28+00:00
- Language: en

## Definition

A financial derivative in which the conclusion and execution of an exchange transaction on the foreign exchange market are separated in time. - The partners agree to buy (sell) a certain amount of foreign currency at the forward rate, which is usually a three-month forward rate. The forward price may deviate upwards or downwards from the daily rate. - If the forward price is higher than the daily rate - also known as the spot rate - this is referred to as a report (premium). - If the forward price is below the daily rate, the difference is called a deport (discount). - The difference between the forward price and the daily rate for foreign exchange, calculated in annual percentages, is the swap rate. - See banking market, currency futures, Herstatt risk, lagging, parallel credit, success rates, swap transactions, interest rate differential. - Cf. Monthly Report of the Deutsche Bundesbank, July 2005, pp. 29 ff. (basic, textbook presentation with formulas and overviews). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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