Glossaire

A foreign exchange short position in FX forward markets is a commitment to sell a specified amount of one currency against payment in another currency at a fixed future date, known as the value date, at a specified exchange rate. Typically, a foreign exchange short position offsets a corresponding ‘long’ position that a company takes when it agrees to sell goods for delivery at a future date. In effect, such a foreign exchange short position enables the company to convert a long underlying position to a zero net exposed position, with the forward contract receipt cancelling out the corresponding account receivable.