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FX Swap
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Manage your foreign currency and local.
An agreement to sell foreign currency for Thai Baht and buy foreign currency back in the future using Thai Baht (or vice versa).
Protect against FX risks.
Funding one currency with another.
Exporters importing raw material
(Baht funding for import/export)
Lock-in profit and eliminating FX risk between their production and delivery through FX Swap transactions by buying foreign currency (using Thai Baht) to pay for the raw material, and selling foreign currency forward (for Thai Baht).
Foreign currency borrowing for local operation
(effective Baht funding)
Secure effective Thai Baht funding cost through FX Swap transactions by selling foreign currency borrowing proceed for Thai Baht (for business operations), and buy foreign currency forward to repay the borrowing.
Stable exchange rate from the beginning of contract.
The bank will purchase / sell foreign currency on the trade date which will purchase at a time and sell at another. There are two settlement dates, the near leg is settled on spot date, and the far leg is within one year.
Service Details
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- Users of Swap transactions must have a transaction underlying the trade and be able to show evidence of such to the bank on the date of the agreement unless there is a special request from the Bank of Thailand on a case-by-case basis
- A credit line is required for a FX Swap
- The underlying foreign currency incomes and expenses in the transaction must be in the same currency and amount
- The minimum transaction amount is US$1 million
- A FX Swap contract cannot be canceled unless evidence of the cancellation of the underlying transaction can be shown to the bank, in which case the difference between the agreed exchange rate and the market exchange rate will be calculated and settled
- The transaction is subject to the regulations of the Bank of Thailand
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Frequently Asked Questions
What is underlying?
According to Bank of Thailand (BoT) regulations, a seller or buyer of foreign currency must have an underlying obligation such as invoices for goods and services, loan agreement. However, customers must present evidence to the bank on the date of purchase.
Can I conduct a Swap transaction in advance?
You can choose to conduct your transaction more than Spot Date and of your both legs as long as it is not over your credit limit. Except selling foreign currency in the near leg.
How do I benefit from FX swap?
For example, on June 1st you hold US$1 million in FCD Account and need to transfer this amount to your oversea counterparty account in next 2 months. However, you still concern about FX risks but need to manage your liquidity.
• In this case, you can enter into FX Swap to manage your cash flow and protect risks at the same time.
• On June 1st, you can sell US$1 million Spot / 2 month and buy US$1 million FX Forward / 2 month.
Can I do FX Swap in other currencies?
KBank provides all tradable currencies in option market such as USD/THB, EUR/THB, JPY/THB, USD/CNH, USD/AUD, USD/SGD, etc. For further detail please contact your Relationship Manager (RM) or K-BIZ Contact Center at 02-8888822.
