FX derivatives

14/05/2016 09:09 AM

​A currency swap is an agreement in which you conduct simultaneously two transactions:

  • One spot FX transaction to buy (or sell) an amount of foreign currency;
  • One forward FX transaction to sell (or buy) the same amount of foreign currency in the future.

In which, the FX rates, amount of foreign currency and swap tenor are specified at the time of contract signing. 

Benefits

  • When you need a foreign currency but don’t want to buy it, you can use another available currency to swap with Vietcombank;
  • No FX rate risk as in spot and forward FX;
  • Manage your cash flow more effectively and make use of your available currency;
  • Have opportunity to earn interest rate difference between two currencies.

​Foreign currency option is the transaction between the you (the buyer) and Vietcombank (the seller). In which, you have the right, but not the obligation, to buy or sell a certain amount of foreign currency at a specified FX rate in an agreed period of time. 

If you choose to exercise your option, Vietcombank has the obligation to sell or buy that amount of foreign currency at the FX rate agreed in the contract.   

Types of options 

  • Call option: The right to buy a certain amount of foreign currency at a specified FX rate in an agreed period of time or at an agreed point in time. 
  • Put option: The right to sell a certain amount of foreign currency at a specified FX rate in an agreed period of time or at an agreed point in time.   

Benefits

  • Hedge against the volatility of FX rate;
  • Fix the FX rate most beneficial to you at an reasonable cost.
  • Have opportunity to invest based on prediction on FX rate. 

​Currency futures is the transaction to buy or sell a foreign currency:

  • At an FX rate set at the agreement date;
  • Settle on an agreed future date.

Benefits

  • You have revenue in one foreign currency but need to spend in another;
  • Fix the FX rate to avoid future FX volatility;
  • Avoid foreign currency liquidity crunch in the market.
FX derivatives
FX Treasury
FX forward contract