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Definition of Currency swap
An agreement to swap a series of specified payment obligations denominated in one currency
A fixed rate currency swap against floating U.S. dollar LIBOR payments.
An exchange of cash flows between two counterparties. The
swap in which the principal or national amount rises (falls) as interest rates
Dollar deposits held in Singapore or other Asian centers.
Creditors exchange the debt of one defaulting borrower for the debt of another
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
A currency that is not freely convertible to other currencies due to exchange controls.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
Taking advantage of divergences in exchange rates in different money markets by
The value of a portfolio of specific amounts of individual currencies, used as the basis for
A financial future contract for the delivery of a specified foreign currency.
An option to buy or sell a foreign currency.
Related: Exchange rate risk
An agreement by the parties to a transaction to share the currency risk associated with
Asset allocation in which the investor chooses among investments denominated in
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
Devaluation A decrease in the spot price of the currency
swap between two LIBO rates of interest, e.g. yen LIBOR for dollar LIBOR. Payments are
Eurobonds that pay coupon interest in one currency but pay the principal in a different
A swap in which the cash flows that are exchanged are based on the total return on some stock
A short-term fixed rate time deposit denominated in a currency other than the local
The money market for borrowing and lending currencies that are held in the form of
European Currency Unit (ECU)
An index of foreign exchange consisting of about 10 European currencies,
Extending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
Foreign currency translation
The process of restating foreign currency accounts of subsidiaries into the
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
Interest rate swap
A binding agreement between counterparties to exchange periodic interest payments on
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
An interest rate swap used to alter the cash flow characteristics of an institution's liabilities so
Such a clause on a Euro loan permits the borrower to switch from one currency to
Give the borrower the possibility of drawing a loan in different currencies.
Pure yield pickup swap
Moving to higher yield bonds.
A financial tool in which the buyer has the right, or option, to enter into a swap as a floatingrate
See: differential swap.
Rate anticipation swaps
An exchange of bonds in a portfolio for new bonds that will achieve the target
The currency in which the parent firm prepares its own financial statements; that is, U.S.
A foreign currency held by a central bank or monetary authority for the purposes of
A currency, frequently the U.S. dollar, that is used by other countries to denominate the assets they hold as international reserves.
A currency that is expected to drop in value relative to other currencies.
A swap in which a money manager exchanges one bond for another bond that is similar in
An arrangement whereby two companies lend to each other on different terms, e.g. in different
A contract between two parties to exchange cash flows in the future
Arrangement by two counterparties to exchange one stream of cash flows for another.
Related: swap sale.
The sale of an interest rate swap by one counterparty to the other, effectively ending the swap.
The difference between spot and forward rates expressed in points, e.g., $0.0001 per pound sterling.
An interest rate swap designed to end a counterparty's role in another interest rate swap,
Also called a swap assignment, a transaction that ends one counterparty's role in an interest rate
Options on interest rate swaps. The buyer of a swaption has the right to enter into an interest rate
A swap option; an option on an interest-rate swap. The option gives
swapping two similar bonds to receive a tax benefit.
Virtual currency option
A new option contract introduced by the PHLX in 1994 that is settled in US$ rather
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