A forward contract is an agreement to exchange one currency for another at an exchange rate fixed in advance for a future date or period. A fixed rate is agreed at the start of the contract and remains unchanged regardless of how the market moves before settlement. 

Why are forward contracts used?

Businesses can use Forward contracts as part of an FX Risk Management strategy to protect themselves from currency exposure and the impact that would have on their budget.

Standard forward contracts are not available for all currencies. For some currencies, non-deliverable forward contracts are used instead.