How Does a Currency Swap Derivative Help a Multinational Corporation?
A currency swap is an agreement between two parties to exchange principal and interest payments in different currencies. It helps a multinational corporation manage foreign exchange rate risk and reduce borrowing costs by accessing cheaper funding markets in a foreign currency.
It effectively hedges against adverse currency fluctuations.
Glossar
Currency Swap
Contract ⎊ A currency swap is a financial derivative contract between two parties to exchange principal and interest payments in one currency for equivalent payments in another currency.
Currency Swap Derivative
Agreement ⎊ A currency swap derivative, within the context of cryptocurrency, options trading, and broader financial derivatives, represents a contractual agreement to exchange cash flows denominated in different currencies.
Currency
Definition ⎊ Currency, in this financial context, represents a medium of exchange, store of value, or unit of account, encompassing both fiat denominations and decentralized digital assets.