The forward price consists of two significant parts: the spot exchange rate and the forward spread. The spot rate is the main building block.
The forward price is derived from the spot price by adjusting the spot price with the forward spread, so it follows that both forward outright and spot priceare derivative instruments.
The forward spread is also known as the forward points or the forward pips. The forward spread is necessary for adjusting the spot rate for specific settlement dates different from the spot date. It holds, then, that the maturity date is another determining factor of the forward price.
Just as in the case of the spot market, the left side of the quote is the bid side, and the right side is the offer side.
The forward spread is also known as the forward points or the forward pips. The forward spread is necessary for adjusting the spot rate for specific settlement dates different from the spot date. It holds, then, that the maturity date is another determining factor of the forward price.
Just as in the case of the spot market, the left side of the quote is the bid side, and the right side is the offer side.
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