Foreign exchange swap

(redirected from Cross-Currency Swaps)

Foreign exchange swap

An agreement to exchange stipulated amounts of one currency for another currency at one or more future dates.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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The electrical power generation company said cross-currency swaps have been put in place for 2023, which means the notes will have an effective interest rate of 4.74% per annum.
Interest rate risk is mitigated by cross-currency swaps, which were entered into at closing between the bond issuer and swap providers.
Bankdata recently migrated interest rate and cross-currency swaps from its legacy systems to Murex's MX.3 platform, the solution for trading, risk management and processing for the capital markets.
Of the $10 billion, too, $5.4 billion is from an International Monetary Fund loan while $2.5 billion comprise cross-currency swaps; hardly our own money to spend.
Currently, of the $10 billion that makes up Pakistan's forex reserves, Rs5.4 billion is from an IMF loan while Rs2.5 billion comprises cross-currency swaps.
"AIIB has plans to expand the operations it can support by analyzing, piloting, and building up local currency capabilities, both in terms of cross-currency swaps as well as capital market borrowings," said Ostfield.
Cross-currency swaps are being increasingly used to offset both exchange rate and interest rate risks with daily global transactions in the range of $50bn to $60bn.
When banks raise funding offshore, they swap this funding back into NZ dollars using FX swaps and cross-currency swaps, hedging the foreign exchange risk.
His team works with clients to design effective hedging strategies, utilizing foreign exchange options and cross-currency swaps. His group also specializes in foreign exchange-related accounting issues and quantitative analysis.
Depending on whether the companies planned to use the funds overseas or bring them back to the U.S., some have turned to cross-currency swaps to hedge that exposure, Gaylor said.
FX benchmark rates, such as the WM/R Rates, are used for pricing of cross-currency swaps, foreign exchange swaps, spot transactions, forwards, options, futures and other financial derivative instruments.