Plain FX Forward

FX Swap

Guarantee liquidity without currency risk

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.


Features of FX Swap

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Two deals with different directions and dates combined in one product

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Provides liquidity in a given currency

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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:

Treasury Sales Department

 

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

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