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Interest Rate Derivatives


Currency Swap refers to a swap that involves the exchange of principal and interest in one currency for the same in another currency.

Interest Rate Swap refers to an agreement between two parties where one stream of future interest payments is exchanged for another based on a specified principal amount.


•This produce is typically used to manage currency mismatch and hedge interest rates / exchange rate risk.

•Suitable for corporate customers who have long term foreign currency debt or who wish to hedge their currency or interest exposure by derivatives.

2.Interest rate option

An interest rate option is an option contract whose payoff depends on the future level of interest rates.  The holder of an interest rate Caps (Floors) option will receive payments if the bench mark interest rate is above (below) the strike interest rate at a certain date. The interest Rate option is a useful financial tool for variable rate borrowers (investors) investors to protect against rising (falling) interest rates while also retaining the advantages of lower (higher) interest rates.

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