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A currency forward contract is an agreement to exchange a fixed amount of one currency for another at a future date, with the exchange rate predetermined. There are outright forwards (exchange of currencies) and non-deliverable forwards (settled in a single currency). These contracts can be used for speculation or risk management. In this tutorial, an example of a US technology company expecting a payment of 10 million British pounds in 90 days is discussed using an outright forward contract. The current spot rate is $160 per pound, so the exporter expects to receive $6 million US in 90 days.
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