Forward contracts are usually liquidated by actual delivery of the currency, while futures contracts are usually liquidated by offsetting transactions.

Question

Quizplus · Accepted Answer

This is generally true. While it is possible to settle a futures contract by actual delivery, it is not the typical method of liquidation. Most futures contracts are offset by entering into an equal and opposite transaction before the contract's expiration date. In contrast, forward contracts are typically settled by actual delivery of the currency or asset at maturity.

Forward Contracts Are Usually Liquidated by Actual Delivery of the Currency