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.
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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This trend mainly affected foreign exchange swap transactions (for monetary policy purposes), which amounted to 1,067 MD CiCi in July 2019 as against 1,209 MD the previous month and 2,428 MD in December 2018.
These products concern, in particular, interest earned on its interventions through tenders, but also firm purchases of treasury bills, in the framework of the open market, and the proceeds of loan facilities to 24 hours granted to banks, as well as the proceeds of deferrals on foreign exchange swap transactions.
Since the Asian currency crisis of 1997, Nomura noted that Asia's total foreign exchange reserves had been built up to over $6.5 trillion from under $1 trillion in 1996 while a web of intra-Asia central bank foreign exchange swap lines have been established, including with Asia's two largest forex reserve holders, China and Japan.
On Sunday night Turkey`s banking watchdog BBDK said it was limiting banks` foreign exchange swap transactions.
Optimism about better relations with the European Union after a Turkish court released two Greek soldiers pending trial and a banking watchdog's step to limit foreign exchange swap transactions have also helped the lira.
Turkey's banking watchdog BBDK in a statement said it was limiting banks' foreign exchange swap transactions.
FX swap: A foreign exchange swap is an agreement to exchange one currency for another on one date and to reverse the transaction at a future agreed date.
Afreximbank President Benedict Oramah said "the facility could operate either as an allocation of trade finance lines of credit to key state-owned commercial banks based on a list of import letters of credit" with them, or as "a foreign exchange swap arrangement with the CBE under which Afreximbank would fund the CBE with U.S.
For example, a transaction that is willfully structured as a foreign exchange forward or foreign exchange swap and qualifies for an exemption from substantive regulation by the CFTC, but with the sole intent to evade any CFTC requirement, may be deemed by the CFTC to be a regulated swap.
Islamic foreign exchange swap is a contract that is designed as a hedging mechanism to minimise market participants' exposure to volatile and fluctuating market of currency exchange rates.
Controversy over whether the $25.6 trillion foreign exchange swap market should be regulated led to a compromise--Dodd-Frank included 'foreign exchange swaps' and 'foreign exchange forwards' in the definition of 'swap', making these instruments subject to the CFTC's jurisdiction, but allowed the Treasury Secretary to exempt these products from the clearing and trading mandates of the swaps regulation.

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