The margin the safety margin to cover the exchange rate risk which the writer of a forward transaction has to put up or deposit will be constantly adjusted in accordance with market conditions during the course of the forex swap transaction. You are here: Private customers Our products Make payments Forex swap transaction.
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Forex swap transaction A cross between a spot transaction and a foreign exchange forward contract. Set up now. Preconditions and conditions Expanded Collapsed A postal account in the relevant currency is required for foreign exchange transactions.
Setting up forex swap transactions Simply by telephone. This might interest you too. E-finance Access to your account anytime and anywhere Manage multiple accounts and customer bases with a single login Access also available via the PostFinance App. Access to your account anytime and anywhere. Manage multiple accounts and customer bases with a single login. Secure effective Thai Baht funding cost through FX Swap transactions by selling foreign currency borrowing proceed for Thai Baht for business operations , and buy foreign currency forward to repay the borrowing.
There are two settlement dates, the near leg is settled on spot date, and the far leg is within one year. According to Bank of Thailand BoT regulations, a seller or buyer of foreign currency must have an underlying obligation such as invoices for goods and services, loan agreement. However, customers must present evidence to the bank on the date of purchase. You can choose to conduct your transaction more than Spot Date and of your both legs as long as it is not over your credit limit. Except selling foreign currency in the near leg. However, you still concern about FX risks but need to manage your liquidity.
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Forex swap transaction | PostFinance
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Foreign exchange swap
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More news Forex transactions These entail all transactions involving the exchange of two currencies. Comment: A spot currency contract has no lifespan; there is no end date. Rates Market participants always quote currencies in price intervals: The lower price figure represents the trader's buy price: in other words, the bid price, while the higher figure is the sell or ask price. Cross rates Rates are posted on the market for the most actively traded currencies: the euro and dollar rates are listed daily on a continuous basis against other currencies.
Forward or Outright exchange Forward or outright currency trading entails a swap between two currencies at a negotiated date value date and exchange rate. Calculation of forward rates Forward rates are not listed on the market. From the viewpoint of the trader quoting the transaction, the forward currency transaction entails three operations: A spot transaction running in the same direction as the forward.
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A loan of the currency bought on the same terms as the forward transaction the loan pay-back incoming cash flow coinciding with the forward purchase. A borrowing of the currency sold pay-back flow coinciding with the forward sale. The trader must quote a forward purchase of amount A 1 of currency C 1.
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Where N is the loan's life in days. Comments: This calculation applies only to periods of less than one year. Other calculation methods exist, depending on the currencies. Forex swap A forex swap consists of two legs: a spot foreign exchange transaction, and a forward foreign exchange transaction. Front-to-back processing of a currency transaction Trading The forex market is an OTC market, driven by banks and brokers. Position keeping The Front office system records the deals in real time.
Reconciliation of confirmations: given the considerable trading volumes, back offices use automated systems to reconcile confirmations issued with those received.
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This makes it possible to detect errors or miscommunications before launching payments. Payment issuance: generation of a payment order MT for the correspondent bank in the payment currency and of a notice of cash receipts MT for the correspondent bank in the currency received. At the value date, the off-balance sheet accounting item is reversed and the deals are recorded on the bank's balance sheet.
Currency transactions add to the accounts that are not denominated in the bank's balance sheet currency. The positions held add to the currency position accounts the daily revaluation of which triggers re-measurement of the bank's currency risk. Translated from French by Valdere Translations , Financial translation specialist. Comments 2. My account. Log in.