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We need hedging
Barrier currency option
Do you need to hedge yourself against an undesirable development in the currency rates? Are you, at the same time, willing to accept a certain level of risk, and thus cut down the price of hedging by 10-90% in comparison with a standard Currency Option? Then you can use the Barrier Currency Option. Such options are divided into "Knock in" and "Knock out" types. Knock in options are options that behave in the same manner as currency (call/put) options, if they are activated during their life. Knock out options are options that behave in the same manner as currency (call/put) options, if they are not de-activated during their life (then they cease to exist). The level of accepted risk results from the type of the Barrier Currency Option.
Cross currency swap
Are you looking for an efficient way to restrict the currency and interest rate risks? Then you can use the Currency Swap of the CCS type (Cross Currency Swap). This is basically an agreement about exchanging the security of two currencies and the interest costs related to these. Party A undertakes to purchase money in currency 1 from party B for a certain amount of money in currency 2, as of the firmly-set date and at the same time, it undertakes a reverse sale of the same amount of money in currency 1 for a certain amount of money in currency 2 in the same exchange rate and as of the firmly-set later date (within one year upon concluding the deal at the latest). Within the deal's duration, the parts mutually pay the interests of the currencies which they purchased at the beginning of the deal from each other.
Currency forward
Currency forward is a purchase or a sale of one currency for another currency in the rate agreed in advance between involved parties. The deal is settled with the forward value date (thus longer than 2 business days).
Currency Option (European type)
Currency Option represents a right (an option) to buy or sell a given amount in one currency for another currency, for the rate agreed in advance by counterparts, on the declared date.
Currency swap
Currency swap is a combination of two transactions, spot and forward.
This product consists in a purchase of one currency for another currency with at the latest spot settlement and a re-sale with a forward value date settlement.
Both transactions are concluded at the same moment.
Forward Rate Agreement
FRA (Forward Rate Agreement) is a contract concluded between the bank and the client, the object of which is an agreement on the future interest rate for a particular term deposit or loan within a certain agreed future term. At the same time, no party actual provides to the other party a loan or accepts a term deposit from the other party, but the parties only exchange the difference between the interest rate agreed in the FRA transaction (the "FRA rate") and the actual market interest rate published on the financial market within the agreed time limit with respect to the term deposit or loan, which corresponds exactly to the terms of the FRA transaction.
Interest Rate Option
In general, the option represents a right to buy or sell the defined instrument on agreed dates.
The instrument, in case of the interest rate option, is the exchange of payments from the agreed fixed rate for the payments from the determined floating interest rate.
Interest rate option enables to the buyer to hedge his position against the increase or the decrease of interest rates.
Interest Rate Swap
Interest rate swap (IRS) is an agreement on an exchange of cash flows denominated in one currency that are derived from a fixed or a variable base.
Party A undertakes to pay a party B agreed fixed interest on an agreed principal, for an agreed period, as of agreed due dates. At the same time the party B undertakes to pay the party A agreed float interest on the agreed principal, for the agreed period, as of agreed due dates.
