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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