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Foreign Exchange

1、FX SPOT/FORWARD/OPTIONAL FORWARD

A FX spot contract is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on two business days from the trade date.

A FX forward contract is an agreement between two parties to exchange two designated currencies at a specific time in the future. Normally the settlement date is no longer than one year from the trade date.

FX optional forward is similar to FX forward. However, the client has the flexibility of settling the transaction of foreign exchange any day up to the last day of the agreed date.

FEATURES

Client can exchange two different currencies with predetermined price at the value date or within the optional value period.

Suitable for corporate customers who wish to use FX Forward instrument to effectively lock the forward exchange rate.

2、FOREIGN EXCHANGE SWAP

Foreign Exchange Swap - a pair of currency transactions, one currency is exchanged for another for an agreed time period. One purchase, one sale, for 2 different value dates, one of which is spot or forward, the other is forward. The cash flow for swap transaction occurs at the beginning of the trade and at the maturity of far leg. FX swap is a useful instrument to hedge both exchange rate and interest rate risks.

FEATURES

•Foreign exchange swap transaction allows clients to hedge against exchange rate and interest rate risk while the same time minimizing the cost of foreign currency exchange. It allows customers to effectively control market risk as well as matching the future cash flows of foreign currency assets or liabilities to meet business needs.

•Suitable for corporate customers have currency mismatch or who need to effectively hedge their exchange and interest risk.