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Dear Sir,
As theory, all future contracts just only sell or buy in USD, is it right in practices ?
and whether there is any exam may settle in other currency in the past, more importantly, how we could identify which currency shall be settled from the given question I am a bit confused the issue, pls. advise.Much thanks
The currency of the futures contract will always be given in the question and does not have to be USD. You will always be told the contract size, and the currency in which that is given is the currency of the futures.
I do suggest that you watch the free lectures on foreign exchange risk management, because this is dealt with within the lectures 🙂
Although we know the future contract currency, however, which currency the gain/loss of future contract shall be settled, for example : the Contract size 120,000 Euro however, in the answer, the gain/loss of futures contract always settled in USD, if the futures holder is UK company and then they need to be converted this amount into pounds
If they are $/€ futures, then yes – the profit or loss is calculated in $’s.
If they are GBP/€ futures then the profit or loss is in GBP’s.
It depends what currencies the futures are in.Hi john, goodevening. Please when is basis added or deducted to calculate lock-in rate…
If the current futures price is more than the current spot rate, then the lock in rate will be higher than spot and lower than the current futures price.
If the current futures price is less than the current spot rate, then the lock in rate will be lower than spot and higher than the current futures price.(Futures price and spot move closer together over time)
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