Forward Exchange Market Reform

Wilbert O. Bascom
Additional contact information
Wilbert O. Bascom: State of Florida

Chapter 10 in The Economics of Financial Reform in Developing Countries, 1994, pp 137-152 from Palgrave Macmillan

Abstract: Abstract Exchange rate fluctuations present a risk to two main types of businesses: those with future foreign currency payment obligations (e.g. importers) and those with future foreign currency, receipts (e.g. exporters). The former type of business is exposed to an appreciation of the foreign currency relative to the domestic currency, or run the risk of having to pay, in the future, more in domestic currency for the same amount of foreign currency. The latter type of business is exposed to a depreciation of the foreign currency in terms of the domestic currency or run the risk of receiving, in the future, less domestic currency for the same amount of foreign currency. Buyers and sellers of foreign currencies may therefore want to cover their risks against exchange rate fluctuations through forward exchange markets if such markets exist for the currencies involved. With the use of a forward exchange contract, they may cover the risk of an appreciation by a forward purchase and the risk of a depreciation by a forward sale of the foreign currency.

Keywords: Exchange Rate; Interest Rate; Central Bank; Foreign Exchange; Commercial Bank (search for similar items in EconPapers)
Date: 1994
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-23372-4_10

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349233724

DOI: 10.1007/978-1-349-23372-4_10

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().