Forex Settlement Agreement

IX. Examples In May 2016, a customer of the exporting company received a payment of $20 million for goods in twelve months; Given that the exchange rate fluctuations of RMB are currently larger and to guard against the financial risk associated with exchange rate fluctuations, the client made an announcement of $20 million in twelve months with ICBC, the agreed futures price being $6.72. In May 2017, the transaction became due and the customer sold the USD at the agreed rate of 6.72 and purchased the corresponding RMB. Assuming that the USD to RMB spot price on the maturity date is 6.60, the customer will benefit from the benefits of the previously blocked exchange rate and reduce financial costs by RMB2.4 million (RMB20 million× (6.72-6.60) – RMB2.4 million). Assuming the spot price is 6.80, the customer bears the risk of the previously blocked exchange rate and bears the increase in the financial cost of RMB 1.6 million (RMB20 million× (6.80-6.72) – 1.6 million); However, given that the client hedged against the risk associated with exchange rate changes in foreign exchange determination and sale operations and that future cash flows have been stabilized, the effectiveness of managing financial costs is not compromised. 80. The transaction agreement can be signed in one or more counterparties that together constitute a binding agreement. For merchants who wish to terminate their contract, there are two ways to compensate for an FX contract: cash counting or physical delivery of the currency. For many FX futures, the last trading day is usually the second trading day before the third Wednesday of the contract month. Like any other futures contract, a trader with an open position, they may decide to charge or roll their position to avoid unwinding and delivery.

However, when they decide to expire, they should understand the final counting procedures of the specific contract they are acting on. A cash currency transaction, also called fx spot, is an agreement between two parties to buy a currency against the sale of another currency at an agreed price for settlement on the date of the spot. The exchange rate at which the transaction is made is called the spot exchange rate. In 2010, the average daily turnover of global foreign currency cash transactions reached nearly $1.5 trillion, or 37.4% of all foreign currency transactions. [1] Foreign currency cash transactions increased by 38% between April 2010 and April 2013 to reach $2 trillion. [2] VII. Channels and Hours of Service Currency billing and forward sales can be carried out through retail outlets and electronic banking.

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