foreign exchange option definition

foreign exchange option

Arrangement in which a party acquires (upon payment of a fee) the right but not the obligation to buy or sell a specified amount of a currency on a fixed date and at a fixed rate. Such options are used usually by importers as a hedge against exchange rate fluctuations. See also foreign exchange contract.

foreign exchange option is in the Banking, Commerce & Finance, Currency Trading, Disaster Planning & Risk Management and Investing subjects.

foreign exchange option appears in the definition of the following term: foreign exchange contract

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