2.5 Maintenance of Forward Exchange Rates

When you revalue a forward FX contract using the rebate (NPV) method of revaluation, an exchange rate referred to as a 'Forward rate' is used for the currencies involved. The forward rate for a currency (for a specific period) is based on the spot rate and the prevailing interest rate.

The forward exchange rates for a currency is maintained in the Forward Exchange Rates screen.

Forward exchange rates for a currency is maintained in the Forward Rate Input screen.

1. On the Home page, type CYDFWRAEin the text box, and click the next arrow.

   Forward Exchange Rates screen is displayed.

   Figure 2-6 Forward Exchange Rates

   
   Description of "Figure 2-6 Forward Exchange Rates"
2. On the Forward Exchange Rates screen, click New.
3. On the New tab, specify the details as required.

   The Forward Exchange Rates screen with the New tab parameters is displayed.

   This screen allows the following functions:

   • Define forward rates for a new currency pair, or
   • Define forward rates for an existing currency pair but for a different base date.

   For information on the fields, refer to the below table.

   Table 2-4 Forward Exchange Rates- Field Description

   Field	Description
   Currency pair	First Indicate the currency pair for which you are maintaining the forward rate. In the Currency 1 field, invoke the list of the currencies that are maintained by the bank — double click on the currency to choose it, which would be the first currency of the pair. In the Currency 2 field, select the other currency that constitutes the pair. The forward rates that are specified subsequently will apply to this currency pair.
   Base Date	The forward rates maintained subsequently, will apply to all forward FX contracts from the base date. The current system date is displayed in this field.
   Spot Rate	The spot rate for the day- for the currency pair - is displayed in this field. The forward rate is computed using the spot rate displayed in this field. To compute the forward rate, the premium or discount points for the currency pair (specified subsequently) is added to or deducted from the spot rate displayed.
   Period Code	You can maintain forward rates for specific tenors (in days). These tenors are referred to as ‘Periods’. For example, 30 days, 60 days, 90 days etc. For each currency pair, you can maintain forward rates for different periods. In the Period Code column, you can enter the period codes for which you want to define forward rates.
   Points	The forward rates for a currency pair should be maintained in the form of premium or discount points vis-à-vis the spot rate for the currency pair. In the ‘Points’ column, you must specify the forward rate for the period that you specified in the previous column (for the currency pair). The variance you specify will be applied on the Spot Rate to arrive at the Forward Rate, depending on the quotation method for the currency.