FX Swap – spot purchase or sale of one currency against another at the agreed reverse future exchange transaction at the rate specified in advance.
Primary purpose of an FX Swap is to overcome the insufficient liquidity in one currency by a pledge of another currency.
Through a prompt conversion i.e if Client buys a spot EUR against RSD and concludes the opposite deal on the future date, Client gets RSD liquidity during the period agreed.
The exchange rates are fixed and established for both conversions and the prevailing interest rates on the international financial markets of the relevant fx pair, exchange rate as well as the validity period of the deal present a basis for their calculation.
- During the validity of the agreement the customer will obtain the liquidity in one currency replacing it with liquidity in another currency.
- In view of the fact that two opposite conversions of the same currency pair with pre-defined exchange rates are contracted, the Customer is not exposed to FX risk rate change.
- Deals are closed by phone or e-mail
- An Agreement is concluded between the customer and the Bank
- To be protected against default risk, the customer is obliged to make a special purpose deposit proportional to the validity of the agreement
- Other details are agreed directly with the customer