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FX Forward

FX forward contract is a contract for corporate to purchase a predetermined amount of currency and sell an alternative currency settled on a specific delivery date in future. FX forward contract can be used to lock in the FX rate and manage future cash flow to meet company’s financial plan and budget.

FX Swap

FX Swap is a contract for corporate client’s simultaneous purchase and sale of one currency against another with two different value dates. The difference of FX contract rates between the 2 settlement legs reflects the swap points, which is derived from the interest rate differential embedded in currency trades. FX swap contract can be used to fund its foreign currency shortfall.

FX Option

FX Options is a contract under which the option holder has the right, but not the obligation, to buy a particular currency (call) and sell an alternatives currency (put) at a predetermined rate on a specified date (European option) in the future.

  • An option buyer has the right, but not the obligation, to buy a specific amount of currency and to sell another currency at pre-agreed strike price on the agreed expiry date.
  • An option seller has the obligation to buy a specific amount of currency and to sell another currency at pre-agreed strike price on the agreed expiry date.

Corporate client can use option to hedge its FX risk with flexibility.

Cross Currency Swap

Cross currency swap is a contract in which two parties agree to exchange interests and/or principal in two different currencies for an agreed period of time. Counterparties exchange the two currencies with a concomitant agreement to reverse the exchange of the currencies at a fixed date in the future. Usually, prevailing spot exchange rate at the time of transaction is used to establish the amounts to be exchanged. Each counterparty also agrees to pay to another a periodic interest amount which is the relevant interest rate, being fixed or floating, times the underlying notional principal.

Cross currency swap can help corporate client to manage and hedge both FX and interest rate risk. It might also help client to reduce funding cost.