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Exchange Rate Agreement (ERA)
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A synthetic agreement for forward exchange (SAFE), much like a forward rate agreement in the interest rate market, that increases or decreases in value as the spread between two forward currency exchange rates, say, three months and six months forward, moves up or down. Note that in contrast to a forward exchange agreement (FXA), the ERA is settled with reference to two forward rates rather than a forward and the spot rate on settlement. Usually related to some other risk position rather than a stand-alone position. See also Forward Rate Agreement (FRA), Forward Exchange Agreement (FXA), Synthetic Agreement for Foreign Exchange (SAFE).
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