The forward currency market consists of two instruments: forward outright deals and swaps. A swap deal is unusual among the rest of the foreign exchange instruments in the fact that it consists of two deals, or legs.
All the other transactions consist of single deals. In its original form, a swap deal is a combination of a spot deal and a forward outright deal. Generally, this market includes only cash transactions.
Therefore, currency futures contracts, although a special breed of forward outright transactions, are analyzed separately. According to figures published by the Bank for International Settlements, the percentage share of the forward market was 57 percent in 1998.
All the other transactions consist of single deals. In its original form, a swap deal is a combination of a spot deal and a forward outright deal. Generally, this market includes only cash transactions.
Therefore, currency futures contracts, although a special breed of forward outright transactions, are analyzed separately. According to figures published by the Bank for International Settlements, the percentage share of the forward market was 57 percent in 1998.
Translated into U.S. dollars, out of an estimated daily gross turnover of US$1.49 trillion, the total forward market represents US$900 billion.
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