Forward contracts are private agreements between two parties in the OTC markets to buy a currency at a specified future date and price. Essentially, a futures contract is an agreement between two parties to trade currencies at a set price and date in the future.

Forwards and futures markets do not trade actual currencies, unlike the spot market. They deal instead in contracts that represent claims on a specific currency type, a specific unit price, and a future settlement date.

Forwards and futures markets are an integral part of the global economy. They allow large enterprises to plan for future expenses and provide predictability in their operations by locking in a set price for an asset at a predetermined date.

Forwards and futures markets are financial markets where participants agree to buy or sell an asset at a predetermined price on a future date. A forward contract is a private, customized agreement between two parties, usually traded over the counter. It carries higher counterparty risk because it is not standardized or regulated by an exchange. In contrast, a futures contract is standardized and traded on organized exchanges, which reduces default risk through clearinghouses. Both markets are widely used for hedging against price fluctuations in commodities, currencies, and financial instruments. Speculators also participate to profit from expected price movements. While forwards offer flexibility, futures provide greater transparency and liquidity. Together, these markets help manage risk and improve price discovery.