A designated bank and a domestic company enter into a forward FX contract under a forward agreement to specify the foreign currency and exchange rate to be used to settle the underlying transaction, as well as the transaction’s value and tenor. The transaction is finalized on the day of delivery using the agreed-upon currency, amount, and exchange rate. Forward foreign exchange contracts may reduce currency risk and secure clients’ preferred exchange rate zone. A local consumer can use a forward contract to reduce risk exposures from finance, investing, and foreign settlement operations.