when two parties agree to exchange currency and execute the deal at some specific time in the future, a forward exchange occurs. The given statement is true.
A forward contract is a two-party agreement for the exchange of two specific currencies in the future at a certain point in the future. Such contracts often materialise the day following the day the point contracts fix and are used to protect the buyer from changes in currency price.
When a bank enters into a forward contract with an investor, the exchange rate at which it agrees to convert one currency into another at a later time is known as the forward exchange rate. To benefit from the advance rate for hedging purposes, multinational firms and other financial institutions enter into forward contracts. The forward exchange rate is established by the spot exchange rate and the variances in interest rates between the countries, in a parity relationship.
learn more about forward exchange here
https://brainly.com/question/20566578
#SPJ4
