Forward outright
MarketsDefinition
In FX, an outright contract to exchange currencies at a specific future date at a rate agreed today. Used by corporates to hedge foreign cash flows.
Forward FX rate = spot × (1 + interest rate of quoted currency × t) / (1 + interest rate of base currency × t). Embeds the rate differential between the two currencies — the foundation of carry trades.
Forward FX rate = spot × (1 + interest rate of quoted currency × t) / (1 + interest rate of base currency × t). Embeds the rate differential between the two currencies — the foundation of carry trades.
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