Cross-Currency Swap


Cross-Currency Swap
An agreement between two parties to exchange interest payments and principal on loans denominated in two different currencies. In a cross currency swap, a loan's interest payments and principal in one currency would be exchanged for an equally valued loan and interest payments in a different currency.

The reason companies use cross-currency swaps is to take advantage of comparative advantages. For example, if a U.S. company is looking to acquire some yen, and a Japanese company is looking to acquire U.S. dollars, these two companies could perform a swap. The Japanese company likely has better access to Japanese debt markets and could get more favorable terms on a yen loan than if the U.S. company went in directly to the Japanese debt market itself, and vice versa in the U.S. for the Japanese company.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Cross currency swap — A cross currency swap, also referred to as cross currency interest rate swap[1] or simply currency swap[2], is an agreement between two parties to exchange interest payments and principals denominated in two different currencies.[3] Contents …   Wikipedia

  • cross currency swap — palūkanų normų ir valiutų apsikeitimo sandoris statusas Aprobuotas sritis išvestinių finansinių priemonių rinka apibrėžtis Sandoris, pagal kurį, fiksuotą palūkanų normą keičiant kintama palūkanų norma ir atvirkščiai arba kintamą palūkanų normą… …   Lithuanian dictionary (lietuvių žodynas)

  • Currency swap — Foreign exchange Exchange rates Currency band Exchange rate Exchange rate regime Exchange rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange rate Managed float regime Markets Foreign exchange market Futures… …   Wikipedia

  • currency swap — A swap in which specified amounts of one currency are exchanged for another currency at agreed principles over time. In an ordinary currency swap both currencies bear interest at a fixed rate: if both currencies bear interest at a floating rate… …   Big dictionary of business and management

  • Cross-Currency Transaction — A cross currency transaction is one which involves the simultaneous buying and selling of two or more currencies. An example is the purchase of Canadian dollars with yen and the simultaneous sale of yen for U.S. dollars. The term is also used… …   Investment dictionary

  • cross-currency interest-rate swap — A swap of two different interest rates in two different currencies. This usually involves swapping a fixed rate for a floating rate (or vice versa); if both rates are floating it is known as a basis swap See currency swap; interest rate swap …   Big dictionary of business and management

  • Cross Currency Interest Rate Swap — ⇡ Zins und Währungsswap …   Lexikon der Economics

  • SWAP — (finance) Le swap (de l anglais to swap : échanger) ou l échange financier (J.O. du 31 janvier 1990) est un produit dérivé financier. Il s agit d un contrat d échange de flux financiers entre deux parties, qui sont généralement des banques… …   Wikipédia en Français

  • Swap (économie) — Swap (finance) Le swap (de l anglais to swap : échanger) ou l échange financier (J.O. du 31 janvier 1990) est un produit dérivé financier. Il s agit d un contrat d échange de flux financiers entre deux parties, qui sont généralement des… …   Wikipédia en Français

  • Swap de taux d'interet — Swap de taux d intérêt Les swaps de taux d intérêt (en anglais : Interest Rate Swaps ou IRS) sont un produit dérivé financier, dont l appellation officielle en français est « contrat d échange de taux d intérêt ». Voir les articles …   Wikipédia en Français


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