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Guarantee liquidity without currency risk
Product features
In a FX swap, the client simultaneously buys and sells one currency to buy another currency, with both transactions having different values – one executed on the trade date and the other on a forward date. On the one hand, through the FX swap the client converts cash from one currency to another currency, thus providing short-term liquidity in a different currency, and on the other hand guarantees the exchange rate on the forward date.
Two deals with different directions and dates combined in one product
Provides liquidity in a given currency
Guarantees the exchange rate for the reverse maturity transaction
Example: The client has USD 1,000,000 and wants to secure short-term liquidity in EUR, while after 3 months it has to make payments to suppliers in USD, worth USD 1,000,000. For this purpose, it concludes a currency swap with the following two legs:
1st leg, 01.09.2021: The client sells 1,000,000 USD and buys EUR at the rate of 1.1817
2nd leg, 30.11.2021: The client buys 1,000,000 USD and sells EUR at the rate of 1.190
Target market of the product
The FX Swap is a financial instrument, which the bank manufactures and distributes as a product. The table below sets out the criteria for determining for which client profile the product is compatible with or not.
| Positive | Negative | |
| Type of clients | All types of clients: retail, professional and eligible counterparties | - |
| Clients’ knowledge and experience | - The movement and the possible expectations regarding the hedged reference values - Lost profits or realized losses related to a negative change in reference values - Hedging cash flows and providing liquidity in a currency other than the base currency by entering a FX Swap in relation to future receipts or payments on liabilities, or providing current liquidity in a currency other than the base currency - The process of permanent collateral maintenance | Does not meet the indicated knowledge and experience requirements |
| Clients’ financial situation with a focus on the ability to bear losses | Ability to bear a negative result due to FX rate change within the term of the instrument and its maturity | - |
| Clients’ risk tolerance and compatibility of the risk | Low-risk profile, due to the ultimate objective to provide current liquidity in a currency other than the base currency | Inclined to bear the risks of negative deviations of the reference values |
| Clients’ objectives and needs | To hedge or to provide liquidity in a given currency | - |
Contact dealers:
Deyan Mankovski – Head of the Treasury Sales Department– 02 80 10 862
Kalina Mays – Head of FX Department, Treasury Sales Department – 02 97 66 233
Milena Lukanova – Senior Dealer, Treasury Sales Department – 02 97 66 232
Hristo Arnaudov – Dealer, Treasury Sales Department – 02 93 91 364
Velichko Dimov – Dealer, Treasury Sales Directorate Department – 02 93 91 126
Stoyan Georgiev – Senior Dealer, Treasury Sales Department – 02 93 91 130
Hristo Sugarev – Dealer, Treasury Sales Department – 02 93 91 133
Ivelin Ivanov – Senior Dealer, Treasury Sales Department – 02 93 91 365
Martin Georgiev – Dealer, Treasury Sales Department – 02 97 66 234
