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In which circumstance, corporate should use currency swap or swaption hedge foreign exchange risk? How the calculation should be?
Could you illustrate by using an sample question Galeplus plc, a UK-based company to purcahse and operate a new telecommunication system in the republic of Perdia.
Thank you!
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a company with a foreign debt can use a swap by finding a company in the foreign country where the debt is held which also has a debt in the home country where the first company is located and swap the payment so tha respective home currencies are used. swaps can also be used when a company wants to issue loans either at fixed rate of interest or floating rate.
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