What is a Forward Contract ?
How the transactions are recorded in the books. pls. explain in detail
G S Sudarshan
(Partner)
(47 Points)
Replied 31 January 2013
1.In what context thgis question being asked.
2.OKAY is it concerning import and export of goods and services
Please clatify
Bhavesh
(Accounts)
(899 Points)
Replied 31 January 2013
Yes, u are right this is related to Export of Goods.
pawan tewari
( )
(544 Points)
Replied 04 February 2013
in case of export you receive foreign currency, thus there is fear of fall in rate of foreign currency,to mitigate this fear we enter into forward contract with bank,where we sell the foreign currency receivable at a determined rate in future date,thereby reducing risk of foreing exchange fluctuation.
pawan tewari
( )
(544 Points)
Replied 04 February 2013
accounting treatment:
difference b/w purchased rate and booked rate is charged to p/l a/c
G S Sudarshan
(Partner)
(47 Points)
Replied 05 February 2013
Dear Mr Bhavesh.C.Vyas I share with you a very very little knowledge I have gained while working as a dealer in Foreign Dept of a nationalised bank
FX forwards
In general, often when people discuss foreign exchange (FX) transactions the option of a forward is raised.
èEssentially a forward contract is a contract/agreement to buy or sell a stated amount of a given currency at a specific price on an agreed date or range of dates in the future.
èA fixed forward contract is where a client sells one currency, in exchange for a different currency, for a set amount, at a specific price, for delivery on a specific date in the future. This is also called as swap or currency swap and it is normally between banks to square of their day end position
èAn option dated forward contract is where a client sells one currency, in exchange for a different currency, for a set amount, at a specific price, but for delivery between two dates in the future.
èFor both a fixed forward and an option dated forward, the contract is binding on both parties.
How to account it ? Mr Pawan Tewari has replied
For further details And regulation please refer the following circulars:-
G S Sudarshan
(Partner)
(47 Points)
Replied 05 February 2013
Dear Mr I share with you a very very little knowledge I have gained while working as a dealer in Foreign Dept of a nationalised bank
FX forwards
In general, often when people discuss foreign exchange (FX) transactions the option of a forward is raised.
èEssentially a forward contract is a contract/agreement to buy or sell a stated amount of a given currency at a specific price on an agreed date or range of dates in the future.
èA fixed forward contract is where a client sells one currency, in exchange for a different currency, for a set amount, at a specific price, for delivery on a specific date in the future. This is also called as swap or currency swap and it is normally between banks to square of their day end position
èAn option dated forward contract is where a client sells one currency, in exchange for a different currency, for a set amount, at a specific price, but for delivery between two dates in the future.
èFor both a fixed forward and an option dated forward, the contract is binding on both parties.
For further details And regulation please refer the following circulars:-
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