Window forward (flexible forward)
What is a window forward, and when does a business use one?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A window forward is a forward exchange contract that fixes one exchange rate but lets the business take delivery of the currency in parts, on any dates within an agreed window, rather than all on one date. It suits an exporter or importer that knows roughly how much currency it will receive or pay over the coming months, but not on which days. The flexibility is priced in: the rate is usually set at the least favourable point in the window for the business, and whatever has not been drawn by the window's last day must be settled then, whether or not the expected receipt has arrived.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Interest rate swap
- Forward exchange contract
- Transaction exposure
- Interest rate cap
- Hedge cover
- Natural hedge
- Translation exposure
- Over-hedging
- Settlement risk (FX)
- Hedge ratio
- Derivative credit limit (PFE)
- ISDA Schedule
- Collar (interest rate)
- Deal-contingent hedge
- Swap mark-to-market (MTM)
- Hedging policy (treasury policy)
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