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Forward Contracts and FRA

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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August 15, 2021 at 11:57 am #631629
Faizahmad1009
Participant
- Topics: 34
- Replies: 20
Is it true that the difference between Forward Contracts and FRA is that:
Forward rates are used to buy & sell Foreign Currency because of exchange rate changes in future; whereas FRA is used to BORROW or LEND because of interest rate changes in future.
Please correct me that FRA is used to BORROW or LEND Foreign Currency or Local Currency?
August 15, 2021 at 12:33 pm #631642
John Moffat
Keymaster
- Topics: 57
- Replies: 54699
Forward rates apply to foreign currency and fixe a future exchange rate.
FRA’s are nothing to do with foreign currency and are use to fix the interest rate on future borrowings or deposits.
Have you watched my free lectures on all of this?
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