The Forward Foreign Exchange Transaction is a transaction for which ABC enters into an agreement with its customer to settle foreign exchange sale or purchase at agreed exchange rate and in an agreed amount on a specified future date. The settlement date for this transaction mode differs from that of the spot foreign exchange transaction, thus the transaction is termed as Forward Foreign Exchange Transaction. Generally, the settlement date for Forward Foreign Exchange Transaction is within one year; the settlement date for Extra-Forward Foreign Exchange Transaction is over one year.
Features
Forward Foreign Exchange Transaction is the most common method to avoid foreign exchange risks and lock-in foreign exchange costs. All foreign trade settlements and foreign investments involve foreign exchange hedge. Through Forward Foreign Exchange Transaction, you lock-in the costs or proceeds of future payment or receipt of foreign exchange, thereby preventing foreign exchange risks. Customers with foreign currency debts may fix the loan principal and interest payable using this product to prevent foreign exchange rate risk.
Procedures
1. The customer opens a relevant account and enters into the Master Agreement on Foreign Exchange Wealth Management with ABC, and then puts forward transaction authorization and requirement.
2. ABC provides the customer with the Forward Foreign Exchange Transaction solution and quotation.
3. The customer accepts the solution and quotation, and then submits to ABC the Letter of Authorization for Foreign Exchange Wealth Management.
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