FX forward index
A foreign exchange (FX) forward index is an indicative representation (average) of prices on the FX forward market published by commercial banks operating on the Georgian financial market. Calculation of the FX forward index is based on FX forward rates determined by commercial banks on the interbank FX forward market. Individuals and companies make FX forward deals with those commercial banks who offer such services (currently ten commercial banks in Georgia do this). A forward price for an individual FX forward contract is determined by a commercial bank, however the FX forward index published by the NBG will allow a customer to have a better understanding of prices (average prices) on the FX forward market.
FX forward contracts are broadly used financial instruments to hedge FX risks. FX forward contracts allow us to make an FX deal today with a predetermined exchange rate, with the settlement of the deal taking place in the future. The FX forward index represents the difference between the market interest rates of two currencies. The FX forward index is NOT a forecast of an exchange rate.