Inscrit le: 10 Oct 2017
|Posté le: Mar 5 Déc 2017 - 06:17 Sujet du message: What is a Change SWAP?
|The foreign exchange swap is a simultaneous double currency transaction, one cash in one direction, the other futures in the other direction, with the same counterparty. The two counterparties exchange financial flows of the same kind denominated in 2 different currencies. These two transactions are traded simultaneously with the same spot exchange rate. In addition to being a foreign exchange instrument, it is also a dual treasury operation. Indeed, buying for example Dollars against Euros (which we sell) and reselling them against Euros that we buy is equivalent, in terms of flows, to borrow Dollars and lend Euros. This operation has a cost that will represent the interest rate differential between the two currencies. This difference is called report or offset.
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