Valutaswaps

Valutaswaps, or currency swaps, are financial contracts that enable two parties to exchange streams of cash flows in different currencies over a specified period. In a typical cross‑currency swap, the parties agree to exchange notional amounts in two currencies at the start of the contract and to re‑exchange them at maturity. During the life of the swap, each party makes periodic interest payments on the notional in the currency it borrows; the rates can be fixed or floating and are tied to reference benchmarks in each currency. The initial exchange and the final settlement convert the funding obligations of the two parties, effectively transforming debt service costs from one currency into another.

Valutaswaps are used by corporations, banks, and public authorities to hedge currency risk, to obtain funding in a foreign currency, or to manage balance‑sheet currency mismatches. They can be arranged to lock in relative funding costs and to create exposure commensurate with assets or liabilities in different currencies. In practice, pricing reflects interest rate differentials between the two currencies, forward exchange rates for the principal, and counterparty credit risk, as well as liquidity and market basis considerations.

Risks include counterparty default risk, market risk from fluctuations in currency and interest rates, basis risk from imperfect hedges, and operational risk from complex settlement and collateral arrangements. Valutaswaps have a long history in international finance and are commonly used by large financial institutions and corporates as part of funding strategies and risk management.