Forward foreign exchange contract (foreign exchange? Exchange? Forward? Deal? )? Also known as futures exchange trading, it refers to the foreign exchange transaction in which the buyer and the seller first sign a contract to stipulate the quantity, exchange rate and future delivery time of foreign exchange, and then both parties handle the receipt and payment according to the contract on the specified delivery date.
Foreign exchange futures contracts are standardized legal contracts formulated by exchanges. The contract stipulates that both parties pay a certain margin and commission, and buy and sell a certain amount of foreign exchange according to the transaction currency, quantity, delivery month and place. In practice, both parties rarely deliver the actual currency, but reverse the operation before the expiration to offset the original contract.
Foreign exchange options (foreign exchange? Exchange? Option), also known as currency option, refers to the option that the contract buyer buys or sells a certain amount of foreign exchange assets at the specified exchange rate on the agreed date or in a certain period in the future after paying a certain option fee to the seller. ? Foreign exchange option is a kind of option. Compared with stock options, index options and other options, foreign exchange options buy and sell foreign exchange, that is, the option buyer obtains a right after paying the corresponding option fee to the option seller, that is, the option buyer has the right to buy and sell the currency agreed by the seller at the exchange rate and amount agreed by both parties in advance on the agreed expiration date, and the buyer with the right also has the right not to execute the above-mentioned sales contract.
Currency swap (also known as currency swap) refers to the exchange between two debt funds with the same amount, the same term and the same interest rate calculation method, but with different currencies, and also the currency swap with different interest amounts. Simply put, interest rate swap is a swap between debts in the same currency, while currency swap is a swap between debts in different currencies. Currency swap parties exchange currencies, and their respective creditor-debtor relationships have not changed. The exchange rate of the initial swap is calculated according to the agreed spot exchange rate. The purpose of currency swap is to reduce financing costs and prevent losses caused by the risk of exchange rate changes. ? The conditions of currency swap are the same as those of interest rate swap, including the existence of overweight differences and opposite financing willingness, in addition to preventing exchange rate risks.
The functions of these four types of foreign exchange instruments are similar, but the applicable objects are different, not because of their respective advantages and disadvantages. Forward foreign exchange contracts and currency swaps are suitable for international governments, banks and enterprises to avoid the impact of exchange rate fluctuations on their interests, while foreign exchange futures and options are tools used by investment institutions. Of course, they will be used together now. Either way, the final result can only benefit one party. If you still don't understand, ask again.