The risk relates to the forward part of the swap, in which the client sells EUR 1 mil., buys CZK, settlement of the forward part of the swap is in 1 month.
Agreed forward rate 27.950.
On the settlement date of the forward part of the swap, the current spot rate is 28.000.
The client suffered a loss of CZK 50,000.
However, if the transaction was concluded for hedging purposes, the client then understands this loss as the cost of hedging. Hedging protects the client against such a significant change in interest rates, which would cause him or her serious financial problems.
Advantages of a Currency Swap concluded at Komerční banka
the Currency Swap can be arranged in all currencies stated on the Komerční banka exchange list
the transaction is always concluded by telephone with a Client transaction dealer
the client receives confirmation of the concluded transaction containing the agreed parameters of the transaction
at Komerční banka, a team of experienced professionals is at your disposal; they will propose an optimal strategy and are able to respond flexibly to developments on the market
A Currency Swap allows you to:
hedge against both a negative currency market development and a negative interest rate development