Forward rate is the quoted price for foreign exchange to be delivered at a specified date in the future. A forward exchange agreement between currencies states the rate of exchange at which a foreign currency will be bought forward or sold forward at a specific date in the future (typically 30, 60, 90, 180, 270, or 360 days). For example, assume the 90-day forward rate for the Japanese yen is quoted as ¥112/$. No currency is exchanged today, but in 90 days it will take 112 yen to buy one U.S. dollar. This can be guaranteed by the forward exchange contract.
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