Swap
(Updated at 14:33, 12/8/2010)
A swap contract contains 2 transactions carried out simultaneously: 1 transaction for buying/selling a pair of currencies with a certain transaction term; 1 transaction for buying/selling that pair of currencies with another transaction term. A swap contract includes the following details: the two parties, currencies involved, amount, exchange rate, transaction date, payment date, payment instruction. This service applies to financial institutions that have the permission of foreign exchange dealing.

Details

 

-          Swap transaction does not create FX position.

-          Swap transaction is usually composed by a spot transaction and a forward transaction.

-          Swap rate is determined based on spot rate and difference between interest rate of bid currency and ask currency.

-          Swap rate is usually forward points, indicating the difference between interest rates of the two currencies.

-          Transaction term (between VND and foreign currency): from 3 to 365 days.

-          Transaction term (between 2 foreign currencies): upon agreement between Agribank and the financial institution.

 

Application

 

-          Create Fund, increase liquidity for Agribank system.

-          Balance forward fx position.

-          Prolong transaction term of forward contract.

-          Speculate on interest rate difference.

 

Payment

 

-          Transfer via the Nostro account with foreign banks or with the Operations Centre of the State Bank of Viet Nam.

 

Distribution Channel

 

-          For customers as financial institutions: directly contact Foreign Exchange Dealing Department – Agribank Operations Centre.

 

Procedure/Technology

-          Swap is carried out by means such as: Reuters, phone, fax,...

-          Swap dealed with financial institutions that have not participated in Reuters system has its contract signed via Fax, the original copy sent via EMS.

-          When dealing is completed, Agribank Operations Centre put the transacted data into the IPCAS system.

-          Chairman of BOD of Agribank determines the loss limit in fund and foreign exchange trading for Agribank Operations Centre.

-          Trading limits applying to financial institutions in each period are determined by General Director of Agribank.

-          Transaction principle: safe, effective, follow the business limit and fx positions regulated by the State Bank of Viet Nam in each period.

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