Foreign exchange swaps (foreign exchange swaps) refer to the business in which both parties exchange different currencies but with the same term and amount of currency and interest.

Foreign exchange swap transactions mainly include currency swaps and interest rate swaps. The content of these swaps is also a sign that foreign exchange transactions are different from swap transactions, because the latter is a hedging nature of foreign exchange transactions, and double-sided swap transactions include interest rate swaps.

There are two main types of swap transactions:

  1. Currency swap:

The written meaning refers to the exchange of two debt funds with the same amount, the same period, and the same interest rate calculation method, but different currencies, and currency exchanges with different interest amounts are also carried out.

  1. Interest rate swap:

Interest rate swap refers to two funds with the same currency, the same amount of debt (same principal), and the same maturity, but the two parties in the transaction borrow at a fixed interest rate and a floating interest rate respectively. In order to reduce the cost of funds and interest rate risk, both parties do fixed and floating interest rates. Exchange of interest rates.

Interest rate swap means that two currencies are the same

Main forms of foreign exchange swap transactions

The common form of foreign exchange swap transactions is currency swap transactions, in addition to foreign exchange spot and foreign exchange forward swap transactions.

  1. Currency swap transactions

Currency swap transaction refers to a transaction in which the two parties provide the counterparty with a certain amount of principal in a certain national currency, and pay interest to each other in the period of the swap transaction, and then exchange the original currency to the counterparty on the expiry date the way.

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  1. Combination of currency swap and forward transaction

The combined form of currency swaps and forward transactions refers to swap transactions in which foreign exchange spot and foreign forward transactions occur simultaneously.