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Defining Currency Future Contracts (CFC)
The increasing commercial trade in foreign exchange with simultaneous fluctuations in exchange rates has led companies that are trading abroad to demand opportunities to reduce the risk of exchange rate fluctuations. Currency futures contracts are a tool for creating predictability when using foreign currencies by setting exchange rates in advance for future transactions. Futures contracts are mostly used by companies within exports (sales) but also within imports (purchases).
The banks in Norway have different types methods of securing a currency:
Currency account - the customer creates a currency account (bank account) which is used to pay bills or payments received in this currency.
Currency forward contract - binding agreement to buy or sell a certain amount of currency at an agreed price with settlement on an agreed future date (settlement date, due date).
Currency option - gives the customer the right but no obligation to buy or sell an agreed currency amount at a pre-agreed exchange rate at a future date. A currency option is an insurance against unwanted exchange rate developments.
Currency spot rate - a binding agreement to buy or sell a certain amount of currency at an agreed price in cash, immediately. However, spot rate is not suitable for long-term planning of currency sales and purchases.
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Forward/Swap is defined in the futures contract module as a transaction type and is maintained by the application, i.e. the information provided by the bank regarding a Swap – contract can be registered. Basically, a Swap (change contract) will not affect the price of an invoice, order, order or posted invoice; it is the original trading price agreed in the Forward contract that is used.
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Supported by Currency Futures Contract
WiseFish Currency Futures Contract supports:
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