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FRA (FORWARD RATE AGREEMENT) |
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  | FRA (Forward Rate Agreement) |
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Are you looking for an effective way to hedge the interest rate risk? You might find the solution in FRA (Forward Rate Agreement). This is a contract between the bank and a client on a future interest rate for a specific term deposit or a loan for a certain agreed future term. In reality, no loan is provided nor is term deposit received - there is simply an exchange of the difference between the interest rate agreed under the FRA (the FRA rate) and the current market interest rate quoted on the financial market at an agreed futuredate for the term deposit or a loan corresponding to the terms of the FRA. The FRA's nominal value only serves to derive the amount paid under the FRA transaction and there is no actual exchange of the nominal values.
