Currency hedging | OTP banka

Currency Forward (FX Forward)

It is the purchase or sale of a specified amount of the selected currency at an agreed forward rate with a transaction maturity date longer than two business days. The forward exchange rate is calculated based on the current exchange rate on the market and the difference in the interest rates of the corresponding currencies until the maturity date of the transaction. The forward rate can be higher or lower than the current rate. The new KBM offers companies the option of concluding a futures transaction with a maturity of two years.

Advantages

FX Flexible Forward

In a flexible futures transaction, the customer buys a predetermined amount of one currency (e.g. USD base amount) and sells an amount in another currency (e.g. EUR) at a predetermined forward rate and after a predetermined period in the future. On any day within the period, the customer can make a purchase of currency in whole or in part (up to the agreed total indicative amount). Upon predetermining the forward exchange rate on the due date, the customer will:

• if the value of the EUR increases compared to the USD, she paid less USD than if she had bought them at the current exchange rate,
• if the value of the EUR decreases compared to the USD, she paid more USD than if she had bought them at the current exchange rate.

Advantages