Question

• Explain Interest rate swaps versus currency swaps? explain elaborately

Answer 1

Interest rate swaps are those swaps which are entered into, in order to protect from fixed stream of payments with the floating stream of payment.

interest rates swaps are generally done in order to hedge with fluctuation of the interest rate risk and these kind of swaps will helpful in protection against the monetary policy which will lead to immediate and unpredictable change in the interest rates.

currency swap is used to enter into in order to protect it from currency rate fluctuation and he is entering with the another party who wants to protect from currency rate fluctuation.

differences between interest rate fluctuation and the currency rate fluctuation is that one is basically done in order to have both the parties protected from interest rate fluctuations where as another is done in order to protect the party from currency rates fluctuations.