FX Swaps Explained | FRM Part 1, FRM Part 2

FX Swaps Explained | FRM Part 1, FRM Part 2 | CFA Level 1, CFA Level 3

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Күн бұрын

In this video from FRM Part 1 and FRM Part 2 curriculum, we explore the mechanics of FX swaps, how they work, how they can be intuitively decomposed into simpler instruments and how they can be used in practice (as a way of funding an asset denominated in foreign currency by paying interest in the domestic currency). This video is an addendum to the preparation courses offered by finRGB for FRM Part 1 (www.finRGB.com/courses/frm-pa...) and FRM Part 2 (www.finRGB.com/courses/frm-pa....

Пікірлер: 29

@finRGB 3 жыл бұрын

*FRM Learning Objectives:* Compare outright (forward) and swap transactions (FRM Part 1). Differentiate between the mechanics of foreign exchange (FX) swaps and cross-currency swaps (FRM Part 2).

@Ash-lq9cr 3 жыл бұрын

Can you make separate video on Differentiate between the mechanics of foreign exchange (FX) swaps and cross-currency swaps (FRM Part 2)

@kaliemarie 6 ай бұрын

The best explanation of FX swaps! Thank you very much.

@jamescogan2716 8 ай бұрын

Unbelievably clear and helpful to curious layman. Thanks.

@Empirical-Skeptic Жыл бұрын

What a clear and concise explanation of fx swaps. Brilliant!

@reemhameddarwesh9388 Жыл бұрын

Amazing and sooooo helpful . Thank you so much

@SaviJawa 2 жыл бұрын

Thanks a lot🙏

@playwithvihaan7446 2 жыл бұрын

Great Explanation. Please upload av Video on Different types of Forex transaction in detail. Thank you so much.

@WA-hq6ls Жыл бұрын

Thank you sir

@saurabhkumar-gg9dd 2 жыл бұрын

Great video, very informative! Can you also explain how do we perform B/S and S/B swap for deriving cash rate from spot rate

@alanPinto-fo8sp Ай бұрын

@finRGB , So the notional value won't change as the FX rates are locked in at the beginning and since EUR/USD has their own interest rate (Interest rate parity). Won't it have two risk: 1) Interest rate fluctuation risk 2) FX currency risk (where proceeds are received in quote currency and to covert the the same in base currency?

@PB-lb4kj 5 ай бұрын

Why did we divide the spot + fwd rate by 10000

@mufasa6272 4 ай бұрын

Great presentation, thank you sir, but can you tell me why u divided by 10,000 to get the fwd rate?

@finRGB 4 ай бұрын

This is because forward exchange rates are quoted in points over and above the spot exchange rate. Before adjusting the spot, you need to divide the quoted amount by 10,000.

@howwtoacademy 3 жыл бұрын

Great explainer video .At 2:50 , what does taking up long position means ?

@finRGB 3 жыл бұрын

Hello Aram, it means that you are buying Euro and if it appreciates against USD, you will gain.

@csrcaesar 2 жыл бұрын

When you sell a position, you are shorting the position. When you buy a position, you are long the position. You short a position that you expect to go down in value. You Long a position when you expect a position to go up. For e.g. You expect Apple shares to go up. You buy 100 shares. Now you are long Apple & Short USD(implicitly). Meaning you expect better returns in Apple stock than USD(cash as deposit etc..) Hope it is clear.

@rehanraja3863 2 жыл бұрын

can we apply hedge accounting for FX swap?

@5kplamse Жыл бұрын

hi, in regards to your fwd contract. what happens if one year later the firm does not have 10 million euros to pay back ?

@youngsingtan5973 2 жыл бұрын

Why is the rate = 1.2 + 179.1 / 10000? Where did the 10000 come from?

@finRGB 2 жыл бұрын

It comes from the convention followed in forex markets. The 179.1 should be interpreted as number of "points", with each point being equivalent to 1/10,000 (hence the multiplication by 1/10,000 before adding to the spot exchange rate).

@nanettetabuac9651 2 жыл бұрын

i dont get the arithmetic

@nanettetabuac9651 2 жыл бұрын

i got it!! Thanks for the very helpful explanation.

@AF-xt6xk Жыл бұрын

appreciate the effort but they way you explained is very confusing ...

@PB-lb4kj 5 ай бұрын

Mathematically adding spot rate to fwd rate 1.20 + 179.10 should be 180.30. How is it added to become 1.217910?

@finRGB 5 ай бұрын

Because the forward exchange rate "quotes" are in terms of no. of points. As a convention, the number of points needs to be first divided by 10,000 before adding to the spot rate to arrive at the precise forward exchange rate.

@PB-lb4kj 5 ай бұрын

Thanks for explaining so well.