forward-exchange market

forward-exchange market
A foreign-exchange market in which currencies are traded for exchange at a future date. If an importer has an obligation to pay for goods in a foreign currency at some time in the future and does not wish to accept the risk that a currency fluctuation may lead to that obligation increasing, the importer can cover the risk by buying the foreign currency for delivery at a future date. Rates for standard periods for one, two, three, six, and twelve months can be obtained, while for other forward periods the price may have to be negotiated.

Accounting dictionary. 2014.

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