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Hi Tutor, hope you are well!
I have a question regarding 2017JuneQ3a, I understand the meaning of the following sentence and the meaning of exchange control to the company, but I don’t understand how it is a disadvantage of currency swap and how the control is associated with currency swap?
It suggests the drawback is that “If the government decides to impose exchange controls in Wirtonia, Buryecs Co may not be able to realise the receipt at the end of Year 3, but will still have to fulfil the swap contract.”
Thanks in advance!
To fulfil the contract they will have to convert money at the end of the swap.
However if the government imposed exchange controls then that could mean that they were not allowed to convert money.
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