Positions that are of longer term are more often hedged through swap markets than forward markets. The structure of a foreign currency swap is very similar to that of a floating rate interest rate swap. We will take the case of a floating rate ¥1000bn five-year loan with interest paid every three m[...]
Posts Tagged ‘hedging’
July 6th, 2009 - 8:37 am § in Currency
EMERGING MARKETS AND CURRENCY HEDGING
It has been noted that emerging markets have different market properties to those of the developed markets. Here, it is important to sell these out and then in turn relate them to the considerations of passive and active currency risk management. First off, let us look at the major differences that [...]