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 | |
|---|---|
| Duration | 6 months |
| Currency pair | EUR/HUF |
| Amount | EUR 500,000 |
| Spot rate EUR/HUF at the time of pricing | 329.00 (Reuters: EURHUF=D3) |
| Forward rate EUR/HUF for 6 months | 329.55 |
- 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 | |
|---|---|
| Duration | 6 months |
| Currency pair | EUR/HUF |
| Amount | EUR 500,000 |
| Spot rate EUR/HUF at the time of pricing | 329.00 (Reuters: EURHUF=D3) |
| Forward rate EUR/HUF for 6 months | 329.80 |
- 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.
Experts
If you have any questions, feel free to contact us.
János Imrei
Head of Department
Edit Orsolya Kovács-Gyimóti
Deputy Head of Department
Borbála André
Sales
Nóra Gordos
Sales
István Fodor
Sales
Péter Huck
Sales
OTP Trader
Flóra Zsófia Margaritisz
Sales
OTP Trader
Nóra Simon
Sales
OTP Trader
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)
Cross-Currency Interest rate swap
Dual currency structured investment
Forward deal in precious metals (gold and silver) transaction
Long-Term Investment Account T+3 FORWARD
Stock exchange spot transaction
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)
Systematic internaliser - quotes
Notice on the use of LEI CODES
Direct and indirect clearing services in respect of certain derivative transactions announcement
Notice - on the impacts of the pandemic emergency on the money and capital markets
Terms and conditions
Announcements
