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Currency Swap

About Trading Techniques
By Mohammed Helmy
Currency swap
0 20

Currency Swaps :
A currency swap is a cash flow management tool that is very popular with businesses that have foreign currency inflows and outflows at different or unexpected dates. It involves two opposite transactions that are completed simultaneously for the same notional amount. Currency swaps are used for: 1. Matching cash flows 2. Moving up or extending a forward 3. Financing For example, imagine you need US$500,000 today and expect receivables for that same amount six months from now. Instead of buying U.S. dollars at the spot rate and waiting for your receivables to come in in order to resell them, a currency swap can be used. This strategy involves buying US$500,000 at the spot rate and simultaneously reselling that amount using a six-month forward contract. The difference between the two rates will only come from the forward points (see forward contract). This strategy prevents pointless exposure to exchange rate fluctuation. A currency swap combines a spot transaction with a reverse forward contract. (A spot purchase and a forward sale or spot sale and forward purchase).

SWAP Advantages :
1- Resolves problems with the synchronization of foreign currency flows.
2- Makes it possible to extend or move up a forward.
3- Prevents unproductive surpluses and onerous debits.

Drawbacks :
1- Not possible to capitalize on favourable currency fluctuations.
2- Cannot be cancelled. The company must be sure of its needs.

You can now benefit from LDN company’s services through the LDN Global Markets trading platform.

Mohammed Helmy

I’m a Trader with 17 years of experience in the most of Financial Markets ( Equities, Commodities , Forex). I have worked on integrated campaigns for major clients such as Al Horria brokerage, Venus International and Admiral Markets.
Until recently, I Trade in Only the International Markets industry. In this role I was focused on Trading and Portfolio Managing .Successes included creating a social expert to mange the accounts of my clients automatically decisions.
Colleagues know me as a highly creative Trader who can always be trusted to come up with a new techniques . But I know that the client’s business comes first, and I never try to impose my ideas on others. Instead, I spend a lot of time understanding and collecting data about the several markets I can work well alone, but I’m at my best collaborating with others.
I have a PhD from AIN SHAMS University and a Cfte1 from the International Federation of Technical Analysts IFTA.

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