Forward refers to the trading market of foreign exchange pairs to be settled by both parties in the agreed currency and amount on the agreed future date on the transaction date.
The forward foreign exchange market, also known as the “forward foreign exchange market”, refers to the exchange market in which the two parties deliver and settle the foreign exchange against RMB on a certain date in the future with the agreed foreign currency, amount and exchange rate on the transaction date.
The main function of the forward exchange market is to avoid the risk of volatility.
The participants in the general forward exchange market can be divided into three categories:
1. For example, a Taiwanese exporter may receive a payment from an American customer in three months. In order to avoid the sharp depreciation of the US dollar when the payment is converted in three months, the exporter may first sell a considerable amount of three-month forward foreign exchange in the forward exchange market.
Then, whether the dollar rises or falls, he will be sure to convert to the new exchange rate at the agreed rate and avoid the risk.
2, arbitrageurs according to the gap between countries, on the assumption that in a Perfect Market, Perfect the Market), money will by low interest rates to high interest rates, in this case money will flow between the international, exchange rate changes and may produce between the spot exchange rate and the derailment phenomenon, temporarily and arbitrageurs can use to engage in arbitrage profit.
3. Speculators are participants who are willing to bear the risks caused by exchange rate changes and pursue the profits brought by their correct expectations if they have a unique judgment on the future trend of exchange rate. The participation of these participants in the market promotes the vigorous development of the forward exchange market.
The dollar recovered gold below 1950, the United States oil once broke through the 100 mark, London nickel trading will resume.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.