A little note from the area of financial economics. When going through the databases of a financial institution, one often encounters terms like foreign exchange swap, currency swap, interest swap. What is this anyway?<\/p>\n
I understand that a foreign exchange swap is related to a situation that one has foreign currency now, while it is only needed in a future period. One may opt to sell available foreign exchange now with a right to buy the foreign exchange back in a future period. The advantage is that one gets local currency that is available until the moment a payment is due.<\/p>\n
A currency swap involves a situation where the rights and benefits of a loan expressed in foreign currency are exchanged against a foreign party that desires to have local currency. This allows every party to raise money in its local currency and having the benefit to use foreign exchange. I raise Euros on my local market; an American raises dollars on his local markets. We then swap and I get dollars and the American gets Euros. I will pays the dollar interest and I will pay the dollar reimbursement. The American will pay the Euro interest and he will pay the Euro reimbursement.<\/p>\n
An interest swap involves swapping interest payment. Assume I pay a variable interest where I would like pay a fixed interest. If I meet someone who pays fixed interest whereas he prefers to pay a variable interest rate, we may decide to swap the obligations.<\/p>\n","protected":false},"excerpt":{"rendered":"
A little note from the area of financial economics. When going through the databases of a financial institution, one often encounters terms like foreign exchange swap, currency swap, interest swap. What is this anyway? I understand that a foreign exchange swap is related to a situation that one has foreign currency now, while it is […]<\/p>\n","protected":false},"author":1,"featured_media":1707,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1706","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-nice-to-know"],"_links":{"self":[{"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=\/wp\/v2\/posts\/1706","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1706"}],"version-history":[{"count":0,"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=\/wp\/v2\/posts\/1706\/revisions"}],"wp:attachment":[{"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1706"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1706"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/archief.van-maanen.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1706"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}