FX Forward transaction

FX Forward transaction

Buying and selling foreign currency at a specified price and amount at the moment of making a trade for a future date. It provides a simple solution for fixing the exchange rate of the currency conversion due in the future, thereby making it easy to plan the future movement of money.

Forward rate = spot rate + swap points (pro rata spread between two currencies).

Example transaction for exporters to sell EUR against HUF

  • After 6 months, you will have to spend a significant amount of forint, however, in the course of your economic activity, you will generate euro revenues. To eliminate the risk of future fluctuations in the exchange rate, you want to fix the exchange rate in advance.
  • In your opinion, the EUR/HUF exchange rate will fall in the coming half-year.
Transaction parameters
Duration6 months
Currency pairEUR/HUF
AmountEUR 500,000
Spot rate EUR/HUF at the time of pricing329.00 (Reuters: EURHUF=D3)
Forward rate EUR/HUF for 6 months329.55
  • Transaction parametersTransaction parameters
  • Duration6 months
  • Currency pairEUR/HUF
  • AmountEUR 500,000
  • Spot rate EUR/HUF at the time of pricing329.00 (Reuters: EURHUF=D3)
  • Forward rate EUR/HUF for 6 months329.55

Example transaction for importers to buy EUR against HUF

  • After 6 months, you will have to spend a significant amount of euros, however, in the course of your economic activity, you will generate forint revenues. To eliminate the risk of exchange rate fluctuations, you want to fix the buying price in advance.
  • In your opinion, the EUR/HUF exchange rate will rise in the coming half-year.
Transaction parameters
Duration6 months
Currency pairEUR/HUF
AmountEUR 500,000
Spot rate EUR/HUF at the time of pricing329.00 (Reuters: EURHUF=D3)
Forward rate EUR/HUF for 6 months329.80
  • Transaction parametersTransaction parameters
  • Duration6 months
  • Currency pairEUR/HUF
  • AmountEUR 500,000
  • Spot rate EUR/HUF at the time of pricing329.00 (Reuters: EURHUF=D3)
  • Forward rate EUR/HUF for 6 months329.80

Benefits

  • currency conversions at a pre-fixed exchange rate
  • protection against unfavourable exchange rate movements (for importers against weakening of the forint, for exporters against strengthening of the forint)
  • can be closed with a reverse transaction over a term, with net settlement at maturity

Risks

  • The transaction involves an obligation to settle: even at the lower / higher maturity level than the fixed exchange rate, there is an obligation to buy/sell at the fixed exchange rate, i.e. it can even realize unlimited exchange rate losses.
  • If you close the deal with a reverse trade during the term, you may incur unlimited losses depending on the current market situation.

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Experts

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Useful documents

These documents in English language to the person concerned shall be for information purposes only. OTP Bank Plc shall fulfil its obligations imposed by the legal regulations or requirement of supervisory authority by the documents in Hungarian language.
In the event of any discrepancy between the English language and Hungarian language versions, the Hungarian language version shall prevail.

Information on the suspension of the market making obligation (available only in Hungarian)

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Senior Preferred Debt Securities Qualifying as Eligible Liabilities issued by OTP Bank plc

EMIR Announcement

EMIR Information for Clients

Notice on the uEMIR Notice se of LEI CODES

Disclosure of information pursuant to Article 11 (11) of the EMIR Regulation

Information for Clients on MiFID

Global Markets ex-ante cost transparency information (available only in Hungarian)

The data to be published on the quality of execution of transactions according to Commission Delegated Regulation (EU) 2017/575 (available only in Hungarian)

Information on the identity of execution venues and on the quality of execution according to Commission Delegated Regulation (EU) 2017/576 (available only in Hungarian)

Systematic internaliser - quotes

Notice on the use of LEI CODES

Direct and indirect clearing services in respect of certain derivative transactions announcement

Key Information Documents – PRIIPs KIDs

Notice - on the impacts of the pandemic emergency on the money and capital markets

Notice - on the collateralisation of long-term investment combined securities account and long-term investment securities account - cash accounts

Notice - about transactions in chinese yuan (RENMINBI)

Information notice on certain reporting obligations related to trading in futures contracts, options on futures contracts and economically equivalent swaps listed on a United States exchange

Terms and conditions and Announcements

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