Forward contract currency cost
Therefore, forward contracts aren’t usually traded and normally conclude with the actual delivery of currency, whereas futures contracts are typically exchange-traded and close out before they mature (so currency is usually not delivered). 6 That said, forward contracts are a sizable market – by one recent estimate, averaging roughly $500 billion per day. 7 So companies that need to trade between common currency pairs should not find it hard to get rate quotes and execute forward contracts. In a currency forward, the notional amounts of currencies are specified (ex: a contract to buy $100 million Canadian dollars equivalent to, say $75.2 million USD at the current rate—these two amounts are called the notional amount(s)). While the notional amount or reference amount may be a large number,