What should I be aware of before entering into a forward exchange contract?

Lack of flexibility: The contract is binding, and you must complete the transaction at maturity – even if the market rate is more favorable later.

Amount and term: Adjust the contract size and duration to your needs. A term that is too long increases the risk of a mismatch.

Liquidity: Ensure you have sufficient liquidity at maturity. A lack of currency may result in additional costs on the spot market.

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