2 meet the wishes of both parties.

③ Avoid exchange rate risk, because the exchange rate is fixed through forward contracts. The disadvantage of this kind of swap is the same as interest rate swap, and there is also the risk of default or non-performance of the contract. If so, the other party will inevitably suffer losses due to changes in interest rates and exchange rates.

It should be noted here that currency swap and interest rate swap can be carried out separately or simultaneously. But the operation principle is the same as the above single interchange.

In addition to the interest rate swap and currency swap mentioned above, there are many other forms of swap transactions, and here are three.

(1) Parallel loan.

(2) Back-to-back loans.

(3) medium and long-term foreign exchange contracts.