1. Forwards in FX
(Bloomberg)
By: Iti Sharma
(uemf15016)

2. Forward Contract
• A contractual binding to buy or sell a specified amount
of a specified foreign currency at a specified rate on a
specified future date.
• This is in contrast to a spot contract which is an
agreement to buy or sell an asset on its spot date.
– Long Forward: Commitment to BUY foreign-currency at a
pre-specified rate on a given date.
( Importer buys foreign currency)
– Short Forward: Commitment to SELL foreign-currency at a
pre-specified rate on a given date.
( Exporter sells foreign currency)

3. Bloomberg : FX Forward

4. Bloomberg : FX Forward
Bloomberg Generic Pricing
(accurate market indication using
proprietary algorithm)
BGN : Bloomberg Generic Pricing
If you actually called up a broker and asked for a quote on euro-dollar spot, you’d probably
get a quote very, very on par to the BGN source. So BGN is our highest quality FX rate. It sorts
of scans all FX - 6 the contributors that we have, scans the quotes, the time of last update,
runs them through a proprietary algorithm, and spits back out a market-accurate price.

5. Bloomberg : FX Forward
Non-Deliverable Funds
(Currency hedging without
physical exchange of funds)

6. Bloomberg : FX Forward
Shows actual no. of
points

7. Bloomberg : FX Forward
Plug in no. of days to
maturity or calendar
date

8. Bloomberg : FX Forward
Shows interest rate
differential b/w two
countries

10. Forwards : Direct Input

11. Forward points: Negative
(CCY1 interest rate is higher than CCY2 interest rates)

12. Cross – Currency View using “via Third Currency”
Composite
(best market indication: listed
contributors)

13. Cross-Rates Calculator
(breaks down the two major currency pairs to work out the cross pair)

14. Cross – Rates Calculator View using “via Third Currency”
Outrights = Spot rates
+ Forward points
(popular with corporate
customers trading on exact
value date)

15. Par Forwards: Editable window
Check forward rates at a particular date for a specific amount

16. Par Forwards: Editable window
Compare forwards detail at different dates and for different amount

17. Par Forwards View using “via Third Currency”

18. Multi-Currency View: Editable window
All currencies’ forwards detail are shown together. New currency-pair can also be added.

19. Show Charts
Show the forward rates trend for last 5 years b/w selected currencies.

20. Book Forward Contract from Bank

21. Documents required are available on Bank website

22. Cancellation of Forward Contract
• Take opposite position
In case of Exporter:
o Say the exporter books a forward contract for 31st May, 2014 on
1st January 2014 when the spot is trading at 62.00. Forward
Premium for May end is Rs.2.00. The forward rate that the
exporter gets is Rs. 64.
o Say on 31st March, 2014, spot is trading at 61.00 and forward
premium as on that date for May end is 85/87 paisa. If on 31st
March, 2014, the Exporter wants to cancel the May end contract,
then he will have to take the opposite position, that is, “buy dollars
at Rs. 61.87”.
o Here, he Sold dollars at Rs. 64, Bought dollars at Rs. 61.87
Hence exporter’s gain from cancellation: 64.00 - 61.87 = Rs. 2.13

23. Sources
• URLs:
– http://www.fintute.com/2013/06/04/bloomberg-fx-forward-calculator/#.VpxOWPl95di
– http://fmlab.rutgers.edu/wp-content/uploads/Transcript-of-Video-7-FX-Essentials1.pdf
– http://www.microrate.com/media/docs/investment/V-Guide-to-FX-Fowards.pdf
– http://ws9.standardbank.co.za/forexWebsite/docs/forwardexcont.pdf
– http://www.ifaglobal.net/upload/research/pdf/1395831625.pdf
– http://www.londonfx.co.uk/forwards.html
– https://www.rbi.org.in/commonman/English/scripts/authorizeddealers.aspx
– https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2075
– https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5789&Mode=0
• Bloomberg
• Investopedia
• Wikipedia
• Information edified by Prof. B.P Misra and Prof. Banikanta Mishra
• Textbooks: Multinational Financial Management by Shapiro and Indian Financial Systems by Bharti Pathak