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FX Swap

A foreign currency swap, also known as an FX swap, is an agreement to exchange currency between two foreign parties. The agreement consists of swapping principal and interest payments on a loan made in one currency for principal and interest payments of a loan of equal value in another currency. One party borrows currency from a second party as it simultaneously lends another currency to that party.

Understanding Foreign Exchange Swaps
For a foreign exchange swap to work, both parties must own a currency and need the currency that the counterparty owns. There are two “legs”:
Leg 1 is the transaction at the prevailing spot rate. Leg 2 is the transaction at the predetermined forward rate.
Short-dated foreign exchange swaps include overnight, tom-next, spot-next and spot-week

Leg 1 at the Initial Date
The first leg is a transaction at the prevailing spot rate. The parties swap amounts of the same value in their respective currencies at the spot rate. The spot rate is the exchange rate at the initial date.

Leg 2 at Maturity
The second leg is a transaction at the predetermined forward rate at maturity. The parties swap amounts again, so that each party receives the currency they loaned and returns the currency they borrowed.

Benefits from FX Swap
- Fundraising / financing through FX trading, Offset temporary deficits and surpluses in different currencies.
- Balance the mismatching fund maturity, Combine temporary surpluses in different currencies, to improve short-term investment income.
- In the case when the maturity of the fund currency between the raised and the financed is not matching, can balance the mismatch by matching their maturities through FX Swap

Events & Social Responsabilities

Standard Bank nomeia Administrador Delegado Interino

O Standard Bank tem o prazer de anunciar aos seus clientes, parceiros de negócio e à sociedade no geral, que nomeou o Senhor William le Roux para o cargo de Administrador Delegado Interino (CEO), com efeitos imediatos, cujo processo teve a aprovação do Banco de Moçambique.

Webinar: Foreign Exchange Regulation and Marketing Overview

Standard Bank recently promoted a virtual seminar (webinar) about the Regulation of Opening and Operating Accounts in Foreign Currency (Notice 10/GBM/19) in order to explain to its clients the changes that this instrument, approved by the Bank of Mozambique, introduces, as well as its implications, mainly in foreign operations.