Foreign Exchange blp
Spot currency conversion
The spot currency conversion is the purchase or sale of a certain quantity of one currency for another currency at a rate the value of which is fixed pursuant to the current development of the rate on the foreign currency market, i.e. the demand for and offer of a specific currency. It is used to convert financial means when paying to abroad, collecting from abroad or converting funds between the client's accounts conducted in different currencies.
Fixed-date currency conversion (forward)
The forward represents an agreement (commitment) about a future exchange of two currencies with a maturity superior to the spot value, i.e. at least D+3, where the future rate is fixed on the day on which the commitment has been made. It serves to hedge against the currency risk of the client's future money flows in foreign currency. The forward is not a standardized product, i.e. the volumes and maturities are set in accordance with the client's requirements
The currency swap represents a purchase/sale of one currency for another with the simultaneous buyback in a future determined deadline for a predetermined rate. It is a combination of a spot and a fixed-date deal where the future exchange rate reflects the cost of interest and the revenues of the fixed-date period.
More details can be found in the Dealing Manual available from our contact persons.