Forward Rate Agreement Tenor

[US$ 3×9 – 3.25/3.50% p.a] – means that the interest on deposits is 3.25% from 3 months for 6 months and the credit rate from 3 months is 3.50% for 6 months (see also the letter margin). Instead, the two companies involved in this transaction use this figure to calculate the interest rate spread. FWD can lead to currency exchange, which would involve a transfer or billing of money to an account. There are periods of conclusion of a clearing contract that would be at the exchange rate in force. However, the netting of the futures contract has the effect of settling the net difference between the two exchange rates of the contracts. A FRA is used to settle the cash spread between the interest rate spreads of the two contracts. . . .

This entry was posted in Uncategorized. Bookmark the permalink.

Comments are closed.