currency swap


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Currency swap

An agreement to swap a series of specified payment obligations denominated in one currency for a series of specified payment obligations denominated in a different currency. Usually fixed for fixed.

Foreign Exchange Swap

An agreement between two parties to exchange two currencies at a certain exchange rate at a certain time in the future. For example, if a company knows that it will need British pounds in the future and another company knows that it will need U.S. dollars, they agree to swap the two at the agreed-upon exchange rate. This eliminates the risk that the exchange rate will change in a way that is disadvantageous to one party or the other. They are also called currency swaps. See also: Swap.

Currency swap.

In a currency swap, the parties to the contract exchange the principal of two different currencies immediately, so that each party has the use of the different currency. They also make interest payments to each other on the principal during the contract term.

In many cases, one of the parties pays a fixed interest rate and the other pays a floating interest rate, but both could pay fixed or floating rates. When the contract ends, the parties re-exchange the principal amount of the swap.

Originally, currency swaps were used to give each party access to enough foreign currency to make purchases in foreign markets. Increasingly, parties arrange currency swaps as a way to enter new capital markets or to provide predictable revenue streams in another currency.

currency swap

see SWAP.

currency swap

see SWAP.
References in periodicals archive ?
The Islamic Cross Currency Swap (ICRCS) template falls under the ISDA/IIFM Tahawwut (Hedging) Master Agreement, a framework document that contains general terms and conditions, and early termination and close-out netting provisions between transacting parties.
Global Banking News-November 27, 2015--Chinese central bank and ECB getting ready for currency swap
BEIJING, Muharram 16, 1436, November 09, 2014, SPA -- The central banks of China and Canada have agreed to a currency swap worth 200 billion yuan ($32.
TOKYO, July 17 (KUNA) -- An expanded currency swap arrangement among Japan, China, South Korea and 10 Southeast Asian countries took effect Thursday, the Japanese Finance Ministry announced.
To boost trade between the two nations and help reduce currency fluctuations, Australia and South Korea signed on Sunday a 3-year currency swap agreement worth $4.
Chidambaram on Thursday said pingthe bilateral currency swap arrangement between India and Japan will further strengthen financial cooperation between the two countries.
Tokyo: Japan and Southeast Asian countries are in talks over expanding currency swap arrangements to help cushion their economies in financial emergencies, an official said on Thursday, ahead of a Japan-Asean summit next week.
Six major central banks said on Thursday they would make their web of currency swap arrangements permanent as a "prudent liquidity backstop" in case of future global financial strains.
Summary: South Korea's central bank said on Sunday it signed a bilateral, three-year currency swap deal with the UAE worth up to $5.
Pakistan and China have implemented the Currency Swap Agreement (CSA) from 7th May 2013 that was initially agreed in December 2011.
ISLAMABAD -- The three-year bilateral Currency Swap Arrangement (CSA) between the State Bank of Pakistan (SBP) and the Central Bank of Republic of Turkey (CBRT) amounting to US$ 1 billion in equivalent local currencies is being implemented from Tuesday (today).
Wed like to aggressively seek cooperation with Asian partners, and expanding our currency swap deal with Korea is a good example, Motohisa Furukawa, state minister of economic and fiscal policy, said at a seminar in Tokyo.