Forward Foreing Currency Trading

Forward Foreing Currency Trading
Forward Foreign Currency Trading

Simple explanation of Forward transaction; the process of fixing the exchange rate for a future date.

Who can use Forward?

  • Customers who make export and import transactions.
  • Companies who has a exchange rate risk on their balance sheet.
  • Customer who make transaction with purpose of assest management.
  • Customers who wants to effectively manage cash flow.
  • Customers who fallows exchange rate market and has expectations on exchange rates.
  • Who would get foreign exchange in certain term or has debt.
  • Customers who has income and payments in different currencies.
  • Suitable for the customers who wants to guarantee the value of the funds TL or foreign currency.

Fautures:

  • The conditions are determined between the bank and the customer.
  • The term, amount and the exchange rate will be determined and is constant.
  • The obligations are irreversible for both buyer and seller.
  • Minimum of 50,000 USD or equivalent currency.
  • Can make forward agreement on different currency pairs. (USD/TL, EUR/TL, EUR/USD, GBP/USD...)

Example Transaction 1:

This is suitable for the customers who wants to eliminate the risk of decline in the exchange rate or wants to exchange to TL from USD in a high exchange level.

Transaction AmountGBP 100,000
Maturity Date92 day
Spot Market Rate2,9450 (GBP/TL)
Forward Rate2,9950 (GBP/TL)

 

Maturity date; We do not look whether exchange rate is above or below the determined exchange rate GBP/TL 2,9950. Customer sells 100,000 GBP with GBP/TL 2,9950 to TL.

Example Transaction 2:

This is suitable for the customers who to eliminate the risk of the rise in the exchange rate or wants to exchange EUR in a high exchange level.

Transaction AmountEUR 100,000. -
Maturity Date64 day
Spot Market Rate2,5150 (EUR/TL)
Forward Rate2,5350 (EUR/TL)

 

Maturity date; We do not look whether exchange rate is above or below the determined exchange rate EUR/TL 2,5350. Customer buys 100,000 EUR with EUR/TL 2,5350.