Forex Services

Forex Services

Foreign Exchange Transactions

Foreign Exchange Transactions

DFCC treasury facilitates foreign exchange requirements of customers by offering competitive market rates to meet their needs.
Check Foreign Exchange Rates

Forward Foreign Exchange Agreement

A Foreign Exchange Forward Contract is a binding obligation between the Bank and the customer to buy or sell a specific amount of foreign currency,in order to hedge an underlying foreign exchange exposure,at a predetermined exchange rate on an agreed future date.

The following depicts an example of the potential opportunity loss or gain that can occur when an importer or exporter books a forward contract. It depicts the two scenarios when the market spot rate is above or below the fixed forward rate at the time of maturity of a forward. Furthermore, the example assumes a forward rate of 183.00 for 5 months was agreed on the 1st of January for a contract value of USD 100,000/-.

Foreign Exchange Options Contracts

An option is an agreement that gives the buyer, who pays a fee (premium), the right but not the obligation to buy or sell a specified amount of an underlying asset at an agreed upon price (strike or exercise price) on the expiration of the contract (expiry date). A call option is a right to buy the underlying asset and a put option is a right to sell the underlying asset.

The following depicts an example of when an importer or exporter books a foreign exchange option contract. The example below depicts the two scenarios when the “market rate” is above or below the “Strike Price” at the time of “Fixing”. The example assumes the customer agreed a “Strike Price” of 183.40 for 5 months on the 1st of January for a contract value of USD 100,000/- when the market spot was 183.00 by paying a premium of USD 500/-.