Currency Swap
Q. Currency Swap means- Published on 05 May 16a. Movement and exchange of currency in cash by hand between countries
b. Buying and selling of currencies
c. Physical movement of paper currency or gold from one nation to another
d. Exchange loan and/or interest amounts in one currency for equivalent amount in another currency
ANSWER: Exchange loan and/or interest amounts in one currency for equivalent amount in another currency
- A currency swap (or a cross currency swap) is a foreign exchange derivative between two institutions to exchange the principal and/or interest payments of a loan in one currency for equivalent amounts, in net present value terms, in another currency.
- Currency swaps are motivated by comparative advantage.
