Foreign exchange swap

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Foreign exchange swap

An agreement to exchange stipulated amounts of one currency for another currency at one or more future dates.

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.
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THE TURKISH central bank has lowered its lira interest rate on foreign currency swap transactions, reversing a tightening of monetary policy rolled out earlier this month.
To protect cash flow and in line with its overall policy to mitigate risk, Diversified utilized a foreign currency swap on GBP 170m at USD 1.3255 per GBP 1.00 resulting in a realised gain upon settlement of over USD 4m.
At the end of the Pakistan Muslim League-Nawaz (PML-N) tenure, the SBP's foreign currency swap position was $6.7 billion.
Iceland's central bank and China also agreed to a $500 million foreign currency swap in 2010.
The Senate language does not allow audits of possible fosses on foreign currency swap lines, of which there were more than $500 billion at the height of the crisis.
The specifics of calculating the required collateral posting amount for foreign currency swap counterparties is presented in Appendix B.
The most impactful of those is the reclassification of cost of foreign currency swaps which are now classified under interest expense (previously these were netted against income from foreign currency).
Mounting pressure on FOREX reserves (USD 14.6bn at present, SBP reserves at USD 8.1bn and import cover at a meagre 1.7 months), negative net international reserves at ~USD 10bn (NIR - adjusting SBP reserves with forward foreign currency swaps and scheduled debt servicing for 1 year), alongside the infamous Current Account Deficit (at USD 4.8bn in 4MFY19; -4.6% YoY) has persistently stressed the PKR-USD parity.
" "Mounting pressure on foreign exchange reserves ($14.6bn at present, SBP reserves at $8.1 billion and import cover at a meagre 1.7 months), negative net international reserves at ~$10 billion (NIR ndash adjusting SBP reserves with forward foreign currency swaps and scheduled debt servicing for 1 year), alongside the infamous current account deficit (at $4.8 billion in 4MFY19 -4.6 per cent YoY) has persistently stressed the PKR-USD parity," said Arif Habib.
During the last month of 2014, the FX swaps were down to zero as the central bank released all its foreign currency swaps which amounted to less than $1 billion in the previous month.
One is the use of short-term foreign currency swaps in Reserve Bank domestic short-term liquidity management operations.

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