Currency Forwards

This is a discussion on Currency Forwards within the Money Markets forums, part of the Trading Choices category; Well there's got to be some trade off between yield and credit risk and there're other govvies out there with ...

Reply
Page 4 of 4 123 4
 
LinkBack Thread Tools Search this Thread
Old Jul 5, 2012, 7:04am   #25
Legendary Member
 
scose-no-doubt's Avatar
 
Member Since Apr 2010
Default Re: Currency Forwards
Well there's got to be some trade off between yield and credit risk and there're other govvies out there with same denomination but less chance of restructure looming. What am I missing?
__________________
"What the **** is going on here?!" - Mickey B

Looks like Scose be trollin' 'aaaaard tho... as far as some are concerned!
scose-no-doubt is offline   Reply With Quote
Old Jul 5, 2012, 7:24am   #26
Legendary Member
 
Martinghoul's Avatar
 
Member Since Feb 2009
Default Re: Currency Forwards
Quote:
Originally Posted by scose-no-doubt View Post
Well there's got to be some trade off between yield and credit risk and there're other govvies out there with same denomination but less chance of restructure looming. What am I missing?
You're missing the price... Those other govvies out there are a lot more expensive.
__________________
"Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness."
Martinghoul is offline   Reply With Quote
Old Jul 5, 2012, 7:39am   #27
Legendary Member
 
scose-no-doubt's Avatar
 
Member Since Apr 2010
Default Re: Currency Forwards
fair enough...
__________________
"What the **** is going on here?!" - Mickey B

Looks like Scose be trollin' 'aaaaard tho... as far as some are concerned!
scose-no-doubt is offline   Reply With Quote
Old Jul 5, 2012, 10:23am   #28
Rookie Member
 
Lyapunov's Avatar
 
Member Since Mar 2012
Default Re: Currency Forwards
Lyapunov started this thread
Quote:
Originally Posted by Martinghoul View Post
There's no such thing... There are FRAs that trade in each ccy, but they trade independently.

When you trade FX fwds (aka FX swaps), you will be trading a forward exchange rate. That rate is driven by the interest rate parity relationship. That is what the OP is referring to and that's not really related to FRAs. Sometimes people use the term "forward points" or just "forwards".

So, in answer to the original question, the fwd can decline not just because of the spot moving, but also because the pricing of the expected relative interest rates in the market has changed. For instance, you could see this occurring recently in EURDKK.
Thanks much. Very helpful.
Lyapunov is offline   Reply With Quote
Reply
Page 4 of 4 123 4

« Short Sterling Calendar Spreads | Need suggestion »

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Forwards Phoenix669 Futures & Options 3 Jul 7, 2009 3:36pm
Non Deliverable Forwards Lorance1 Futures & Options 1 Dec 6, 2008 6:03pm
Guaranteed money on FX forwards?! UKtradergirl Spread Betting & CFDs 2 Oct 22, 2008 3:45pm
Forex forwards Relative Value Forex Brokers 0 Sep 24, 2008 2:10pm
Forex forwards experts ? tar Forex 7 Aug 20, 2008 6:11am