Forward foreign exchange market in Poland during the global financial crisis

Forward contracts are one of the main instruments of the foreign exchange market. They can be used either for hedging purposes or speculation. In Poland forward market constitutes an important segment of the domestic FX derivatives market and many Polish companies use the forward contracts for hedging against the foreign exchange risk. The global financial crisis however influenced the situation of Polish forward market. This article sets out the situation on forward market in Poland in the years 2007-2011 and shows the use of this instrument by Polish companies especially during the period of the global financial crisis. The cause of the forward contracts market contraction was first of all the slump in demand for foreign exchange derivatives. Many Polish companies registered the negative MTM value of FX derivatives, also forwards, however very often the exports revenues fully compensated negative MTM value.