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Message: <blockquote data-quote="imhotep" data-source="post: 26085312" data-attributes="member: 562115">This is what I wrote yesterday when a member queried what a forward contract is...."It's a lock-in mechanism of the exchange rate for a future transaction. A currency forward contract is between two parties - an agreement where a certain amount of a currency is exchanged for another currency at a fixed exchange rate on a fixed future date."These are called Financial Derivatives... used for risk management, hedging etc. One derivative of this is the class of forwards.  Forward instruments are forward contracts, futures contracts, forward rate agreements (FRAs) and interest rate swaps (IRS).Quite simply why the CBSL did it, is because the currency is under high pressure with high levels of excess liquidity.  This is what the Central Bank Governor's statement says.Excess liquidity which is usually around 10 to 15 billion rupees is believed to have been driven up to over 266 billion rupees. <img src="/styles/default/xenforo/smilies/default/oo.gif"  class="smilie" loading="lazy" alt=":oo:" title="Oo    :oo:" data-shortname=":oo:" />PS: This is the difference of rhetoric and the reality. At press conferences the politicians shake their heads and say that "When we get power , we will show how we run the finances"... but the reality is far different. Fooling the people easy...(we aren't not short of fools either <img src="/styles/default/xenforo/smilies/default/P.gif"  class="smilie" loading="lazy" alt=":P" title=":P    :P" data-shortname=":P" />)</blockquote>

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