A currency future, also FX future or foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date; see Foreign exchange derivative. Typically, one of the currencies is the US dollar. The price of a future is then in terms of US dollars per unit of other currency. This can be different from the standard way of quoting in the spot foreign exchange markets. The trade unit of each contract is then a certain amount of other currency, for instance €125,000. Most contracts have physical delivery, so for those held at the end of the last trading day, actual payments are made in each currency. However, most contracts are closed out before that. Investors can close out the contract at any time prior to the contract's delivery date.
Famous quotes containing the words currency and/or future:
“Common experience is the gold reserve which confers an exchange value on the currency which words are; without this reserve of shared experiences, all our pronouncements are cheques drawn on insufficient funds.”
—René Daumal (1908–1944)
“How difficult the task to quench the fire and the pride of private ambition, and to sacrifice ourselves and all our hopes and expectations to the public weal! How few have souls capable of so noble an undertaking! How often are the laurels worn by those who have had no share in earning them! But there is a future recompense of reward, to which the upright man looks, and which he will most assuredly obtain, provided he perseveres unto the end.”
—Abigail Adams (1744–1818)