Foreign Currency Forward Contract Law and Legal Definition
Foreign currency forward contract means a contract in which the parties to the contract undertake the obligation to exchange the given quantities of currencies at a pre-specified exchange rate on a certain future date. In a foreign currency forward contract, the terms of a contract are negotiated directly between the parties. Here the parties undertake such obligation on the belief that the prevailing exchange rate will move in a direction favorable to him/her by the expiry of the contract. It helps to reduce the foreign exchange risk that is usually faced by the parties. Foreign currency forward contract are over-the-counter contracts which are most useful when both parties have operations or some other interest in a country using a given currency. Multinational corporations conducting business in foreign countries often enter into currency forward contracts to fence their exposure with respect to anticipated acquisition or disposition of nonfunctional currency.
Legal Definition list
- Foreign Currency Effects
- Foreign Court ( Bankruptcy)
- Foreign Corrupt Practices Act
- Foreign Corporations
- Foreign Cooperative Shippers Association [Aeronautics and Space]
- Foreign Currency Forward Contract
- Foreign Depositions Act
- Foreign Diplomatic Mission
- Foreign Divorce
- Foreign Domicile
- Foreign Earned Income Exclusion
