euro increases in value to 67 cents over the year, they would cost you £67,000. If the euro is expected to increase in value, you might agree a forward FX contract to buy €100,000 for £62,000 on a specific date. Of course, you will lose out if the euro falls in value.РForward Foreign ExchangeРThe advantages :?you're protected against any adverse movements in the exchange rate?you can set budgets knowing exactly how much the transaction costs?The disadvantages:?you have to go ahead with the contract once you've arranged it, regardless of whether your circumstances change?because the rate is fixed, you can't benefit from any favorable movement in the exchange rate.?The cost of forward foreign exchange contracts is generally built into the exchange rate you get, so no other fees are payable.
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