A par forward is based on the same principles as a standard forward, i.e. a precisely defined amount is hedged by the fixed rate on the given date. It differs from standard forwards in that there is a possibility to make a series of multiple forwards with regular maturities. The final rate for all forwards in a given par forward series is determined by the average time weighted forward points for each maturity. Such a rate is usually more advantageous for the client than the average rate of standard forwards.
Date of accepted payment |
May 15, |
Aug 15, |
Nov 15, |
Feb 14, |
May 15, |
Spot exchange rate EUR/CZK |
25,75 | |
|||
Par forward agreed exchange rate |
|
26,01 |
26,01 |
26,01 |
26,01 |
Standard forward rate |
|
25,81 |
25,95 |
26,05 |
26,18 |
Accepted payment in EUR |
|
150.000 |
150.000 |
150.000 |
150.000 |
Any drawdown during the par forward term is for the originally negotiated forward rate and at no additional cost.
If you are interested in this product and believe that you would use it as a convenient tool to reduce the risk associated with your business, please contact us.