ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -7.9 Forward rate is the specified exchange rate for exchange of two currencies at a specified future date.

Detailed explanation-2: -The forward exchange rate (also referred to as forward rate or forward price) is the exchange rate at which a bank agrees to exchange one currency for another at a future date when it enters into a forward contract with an investor.

Detailed explanation-3: -What Is a Forward Rate? A forward rate is an interest rate applicable to a financial transaction that will take place in the future.

Detailed explanation-4: -The most common way is to measure a bilateral exchange rate. A bilateral exchange rate refers to the value of one currency relative to another. Bilateral exchange rates are typically quoted against the US dollar (USD), as it is the most traded currency globally.

Detailed explanation-5: -A currency forward is a binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date. A currency forward is essentially a customizable hedging tool that does not involve an upfront margin payment.