Foreign exchange swap
cashback forexrebateindonesiaforex Forex rebate king swap (also known as foreign exchange swap) cashback forex a combination of foreign exchange spot Forexrebateking forward transactions of a contract, the contract between the two sides agreed to a certain date according to the spot rate in exchange for a certain amount of foreign exchange, and then in a future date, according to the agreed exchange rate (i.e., forward rate) to exchange back in an equal amount In fact, the contract between the two sides are exchanged back to the currency for a certain period of time the right to use the terms of the foreign exchange swap. The terms of the foreign exchange swap reflect the exchange rate movements of the two currencies exchanged by the contracting parties and their respective views on interest rates Foreign exchange swaps are quoted in the form of forward points, which can be used to lock in the exchange rate of the currency at a certain point in the future, but also as a means of arbitrage between the spot and forward exchange rates  The United States used foreign exchange swaps to manipulate the exchange market After the financial tsunami, the Federal Reserve and many Western countries In this article, we will talk in detail about the Feds use of foreign exchange swaps to manipulate exchange rates Generally speaking, central banks use foreign exchange swaps to make their currencies stronger through two channels: first, to provide foreign exchange to their financial institutions; second, direct intervention in the exchange market with foreign exchange reserves central banks are very fond of foreign exchange swaps to intervene in the exchange market, the reason is very simple, one can get The reason is very simple, one can get a lot of foreign exchange, the second can be done unknowingly, because it is difficult to figure out which side of the swap needs foreign exchange, there is basically no transparency here, but foreign exchange swap this thing in exchange for always have to change back, the central bank if excessive use of foreign exchange swap this tool, and finally only through the issuance of foreign currency bonds to solve the problem so that the negative impact of foreign exchange swap is also not small United States The use of foreign exchange swaps to intervene in the market, the implementation of a strong dollar is a historical record of the Federal Reserve intervention in the foreign exchange market usually through two tools: foreign exchange equalization fund (ESF) and the Feds open market account from history, the Federal Reserve use of foreign exchange swaps to intervene in the currency market are not good results, and ultimately can only issue foreign currency bonds to pay off the debt and end We first look at the history of the Federal Reserve intervention in the currency market, 1961-1971, the United States in order to slow down the capital market. In 1971, the United States in order to slow down the capital outflow, to induce some major Western central banks to choose to hold dollar reserves and give up the requirement to exchange gold to the United States its foreign exchange equalization fund (ESF) from March 1961 to re-intervene in the foreign exchange market, but it is clear that the number of foreign exchange reserves to the then foreign exchange equalization fund (ESF) is difficult to achieve its purpose so the Treasury and the Federal Reserve in In February 1962, the Treasury Department and the Federal Reserve also joined the team of intervention in the foreign exchange market. At that time, many Western central banks began to sell a large number of dollars in order to diversify their risks, and the Federal Reserve signed swap agreements with several Western central banks in order to obtain a large amount of foreign currency to support the dollar. In the late 1970s, the United States signed a foreign exchange swap agreement with the German central bank of up to $1 billion in order to strengthen its foreign exchange reserves Later, the United States had to reduce its share in the IMF in addition to issuing foreign currency bonds (Carter bonds) in order to repay this foreign debt Now the Federal Reserve is playing the same trick again, especially after the outbreak of the financial tsunami, by conducting a large number of foreign exchange swaps September 29, 2008 , after the deepening of the international financial crisis, the Fed signed currency swap agreements with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss Central Bank Three days thereafter, these five central banks jointly announced the expansion of the size of the swap agreements, the Fed will provide $80 billion, $240 billion, $120 billion and $60 billion of liquidity to these four central banks respectively On October 13, 2008, the Fed On February 3, 2009, the five central banks extended the deadline for the currency swap agreement from April 30, 2009 to October 30, 2009, the Fed, together with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss Central Bank, announced a currency swap agreement between the U.S. and these four countries. The four central banks will each provide the Fed with a total of about $287 billion in foreign currency before October 30 this year, if necessary (remind investors to pay attention to the above date before and after the euro against the dollar) According to the Feds balance sheet on April 1, 2009, a total of $308.8 billion in foreign exchange swap positions, which is not a small amount but the United States in April 6 and signed a If such a large amount of foreign exchange reserves are missing, then what is it used for? Is it used to intervene in the foreign exchange market? I think this is very likely, that is, the recent strength of the dollar is the result of the Feds intervention Now the attitude of the United States has been very clear, is not hesitant to use foreign exchange swaps, continued strong intervention in the currency market to make the dollar strong The reason I have been in the "dollar strength conspiracy" article, we are interested in reading this article Finally, let us talk about the Feds use of foreign exchange swaps to intervene in the currency market on the Gold trend of the impact of the Federal Reserve to intervene in the foreign exchange market to make the dollar strong, in the short term will certainly cause pressure on the price of gold However, we also need to see the United States of this intervention in the foreign exchange market is very costly, will only continue to increase its debt burden financial crisis is originally caused by over-consumption, over-indebtedness, and now the United States solution is to further expand consumption and expand debt, seems a bit I still maintain a long-term bullish view on gold based on this point, but investors must be prepared for the short-term gold price fluctuations and volatility.
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