何為 SWAP ( financial market ) ?

There are two basic kinds of SWAPS – interest rate and currency. An interest rate swap occurs when two parties exchange debt with a floating rate payment for debt with a fixed rate payment or vice-versa. Currency swaps are agreements to deliver one currency against another currency. Often both types of SWAPS are used in the same transaction when debt denominated in different currencies is swapped. To look at an example, we firstly need to look at the three types of trade that take place in the foreign exchange market: spot, forward, and swap. Spot trades involve an agreement on the exchange rate today for settlement in two days. The rate is called the Spot – exchange rate. Forward trades involve an agreement on exchange rates today for settlement in the future. The rate is called the forward – exchange rate. The maturities for forward trades are usually 1 – 52 weeks. A swap is the sale (purchase) of a foreign currency with a simultaneous agreement to repurchase (resell) it sometime in the future. The difference between the sale price and the repurchase price is called the swap rate.

An example, on October 11, bank A pays dollars to bank B’s account at a New York bank and A receives pounds sterling in its account at a bank in London. On November 11 as agreed to on October 11, the transaction is reversed. A pays the sterling back to B, while B pays back the dollars to A. This is a Swap. In effect, A has borrowed pounds sterling while giving up the use of its dollars to B.

SWAP 係唔止interest rate 同埋 currency 的呀.