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 ?
Sources recorded that the currency swap arrangement (CSA) between State Bank of Pakistan (SBP) and People's Bank of China (PBOC) had already been enlarged for a period of 3 years in respective local currencies.
Abu Dhabi: The UAE Central Bank said on Wednesday that a planned currency swap between China and the UAE is going well and that transactions between the two countries are up 13 per cent year on year.
Summary: New Delhi [India], Dec 5 (ANI): Department of Industrial Policy and Promotion (DIPP) under Union Ministry of Commerce and Industry is upbeat over the signing of a currency swap deal between India and the UAE.
The current gross official $8.2 billion reserves are largely maintained by taking short-term loans from commercial banks and taking Chinese and Saudi deposits under the currency swap arrangements.
ISLAMABAD -- The lawmakers here on Wednesday hailed Pak-China currency swap initiative and termed it as beneficial for economic cooperation, coordination and development between the two countries.
Abe and Modi also said they would conclude a $75 billion bilateral currency swap agreement and welcomed an agreement to deepen cooperation between their two navies.
BANKING AND CREDIT NEWS-October 1, 2018--Argentina close to currency swap deal with China
M2 EQUITYBITES-October 1, 2018--Argentina close to currency swap deal with China
CENTRAL Bank of Nigeria (CBN) on Wednesday said the implementation of currency swap agreement with China will drastically reduce importation of fake and substandard goods from the Asian country.
The credit facility that accompanies a currency swap agreement between SBP and China's central bank has been hiked to 20b yuan ($3.13b) from 10b yuan, reports claim.
Fitch's Criteria for Rating Currency Swap Obligations of an SPV in Structured Finance Transactions and Covered Bonds expects that a rating action with respect to a note tranche results in a corresponding rating action with respect to the related rated swap obligations.
The State Bank of Pakistan and People's Bank of China have agreed to increase the currency swap arrangement amount from 10bn Chinese yuan to 20bn yuan and from Rs165bn to Rs351bn, the SBP said in a statement yesterday.