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Understanding Knock-In Forwards

  • Writer: Danny Kinnear
    Danny Kinnear
  • Oct 4, 2024
  • 1 min read

A Knock-In Forward sits within the Protective Strategies group of hedging solutions.


Closely resembling the traditional outright forward, it delivers a protection rate that can be used to secure one’s budget rate.


However, unlike a forward which delivers currency solely at the agreed forward rate, it provides a degree of flexibility that allows for future rate improvement (participation).


This is a widely used alternative to forwards and is perhaps the most traded FX structured solution.


Whilst it can be configured in numerous ways, it is almost always offered to clients as a zero-premium solution.



 
 
 

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