The answer is forward foreign exchange transaction.
An OTC contract is a bilateral contract in which two parties (or their brokers or bankers as intermediaries) agree on how a particular trade or deal is to be settled in the future. It is usually from the investment bank directly to its clients for foreign exchange transaction.
What is forward foreign exchange transaction?
- A forward foreign exchange transaction is the most common method of avoiding currency risks and lock-in foreign exchange costs.
- All foreign trade settlements and foreign investments include foreign exchange hedging.
- Through a Forward Foreign Exchange transaction, you lock in the costs or revenues of a future payment or receipt of foreign exchange, thereby avoiding foreign exchange risks.
- Customers with foreign currency debts can fix the loan principal and interest payable using this product to avoid exchange rate risk.
To learn more about foreign exchange, visit:
https://brainly.com/question/6675565
#SPJ4
