Valuuttaswopin

Valuuttaswopin, known in English as a currency swap, is a financial derivative contract between two parties where they agree to exchange principal and/or interest payments in different currencies. Typically, this involves exchanging a principal amount at the beginning of the contract, and then exchanging interest payments over a specified period, with the principals being re-exchanged at the maturity date at the agreed-upon exchange rate.

The primary purpose of a currency swap is to manage foreign exchange risk or to obtain financing in a foreign currency at a more favorable rate than would otherwise be available. For example, a company that needs to borrow Euros but has access to cheaper borrowing in US Dollars might enter into a currency swap. They would borrow Dollars, swap them for Euros with the counterparty, and then use the Euros for their needs. At maturity, they would swap the Euros back to Dollars to repay their original Dollar loan.

Interest rate payments in a currency swap can be fixed-for-fixed, floating-for-floating, or a combination of fixed and floating rates. The exchange rate used for the initial and final principal exchange is typically the spot rate at the commencement of the swap, or a pre-agreed rate. Currency swaps are often used by corporations, financial institutions, and governments. They are a tool for hedging currency exposure and for optimizing borrowing costs across different currency markets.