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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Currency Swap
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!
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.
That’s great!
Thank you Rode!
Thats a good answer from Rode 🙂