What rate should be used if the settlement date in a foreign exchange transaction is no longer a "good" date?
A) The original rate of the transaction
B) The original rate of the transaction adjusted by the relevant forward points
C) The affected parties should agree to adjust the exchange rate according to the prevailing relevant forward mid swap points at the time the bank holiday is announced
D) The rate is open to negotiation by the two parties

Question

Quizplus · Accepted Answer

When the settlement date in a foreign exchange transaction is no longer a "good" date due to a bank holiday or similar event, the affected parties should agree to adjust the exchange rate according to the prevailing relevant forward mid swap points at the time the bank holiday is announced. This ensures that both parties are treated fairly and that the exchange rate reflects the current market conditions. Option A is incorrect because it does not take into account any changes in the market since the original transaction took place. Option B is incorrect because it assumes that forward points are the only relevant factor in determining the new exchange rate. Option D is incorrect because it leaves the rate open to negotiation without any guidance or benchmarks.

What Rate Should Be Used If the Settlement Date in a Foreign