Future Foreign Exchange Transactions (Forward Transactions)
Forward transactions are future foreign exchange transactions realized mainly to eliminate interest rate/parity risk. The amount, exchange rate and maturity of the transaction to be carried out in the future are set today. Forward transactions can be carried out as both buying/selling foreign currency against Turkish Liras or between two different currencies.
When the forward price is being set, the interest rate differences between the foreign currencies in the forward transaction are added to the transacted prices in the spot market.
Cash exchange in the forward transactions is realized at maturity. It is not possible to renounce the transaction prior to or at maturity.
They are the parity transactions carried out in the international spot foreign exchange markets for arbitrage purposes.
Other Derivative Products
Futures contracts, options and swap transactions are also available for risk management purposes.
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