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dear John
in the calculation of forex swap, the rate we use to buy the foreign currency at the year 0, we use the forex swap rate not the spot rate ??
I mean when we take out the loan to buy the foreign currency in order to swap back with the counter party, the loan we buy the foreign currency should be based on spot rate isn’t ?
because forex swap rate offered by the bank is literally for the purpose of swaping currency. Therefore shouldn’t we suppose to use spot rate to buy the loan in order to swap back with the counter party ?
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