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Private > Investment Product > Currency Swaps

Currency Swaps

  • A Currency Swap Contract is a contract which includes exchange of a currency between two parties within a specified timeframe at defined rates.
  • Currency swap is a two legged transaction. It constitutes of a spot and a forward transaction. Spot transaction is effected on the day the contract is signed, and it involves buy/sell of a currency at the specified rate. The opposite of the transaction is undertaken at a rate and on the date again specified on the first day of the contract (forward contract).
  • This exchange is carried out in order to benefit from the higher interest rate provided by one currency of the pair eliminating the currency risk during that timeframe.