TN: Tom-Next, that is, the value of the next day (Tom is tomorrow), and delivery on the third day.
SN: spot -Next, that is, the spot value (the number of days in the spot varies with the currency, mostly 2 days), and the spot is delivered the next day.
1W: payable at sight and delivered one week after sight.
1M: spot value, delivery in January after sight.
1Y:: Spot value, delivered one year after sight.
Extended data:
Foreign exchange swap means that both parties agree to exchange currency A for a certain amount of currency B, and exchange currency B for the same amount of currency A at the agreed price in the future. Foreign exchange swaps are flexible and diverse, but they are essentially interest rate products. When one party changes to a high-interest currency for the first time, it is bound to compensate the other party. The amount of compensation depends on the interest rate difference between the two currencies. The way of compensation can be reflected by the exchange price due, or by paying the price difference separately.
Foreign exchange swap is a kind of financial swap products. Financial swap, also known as financial swap, refers to the exchange of a group of funds between two parties within a certain period of time according to the pre-agreed exchange rate, interest rate and other conditions to avoid risks. Swap business combines hedging operations in foreign exchange market, money market and capital market, providing a powerful tool to avoid medium and long-term exchange rate and interest rate risks. As an efficient risk management method, swap can be an asset or a liability. It can be principal or interest.
In essence, the swap business of foreign currency against RMB is a combination of spot transaction and forward transaction of foreign currency against RMB. Specifically, banks and customers negotiate and sign swap contracts, respectively stipulating the spot foreign exchange transaction exchange rate and value date, forward foreign exchange transaction exchange rate and value date. Customers exchange RMB and foreign exchange with banks according to the agreed spot exchange rate and delivery date, and vice versa according to the agreed forward exchange rate and delivery date. Foreign exchange swap is a common means to avoid exchange rate risk in the international foreign exchange market.
For example, a trading company in Guangdong Province exported products to the United States and received a payment of $6,543,800+. The company needs to convert the payment into RMB for domestic expenses in China. At the same time, the company needs to import raw materials from the United States, and will pay $6,543,800+within three months. At this time, the trading company is holding US dollars, and what it lacks is RMB funds. If USD was 8. 10 at that time, the company converted USD 10 into RMB 8 10 at the price of 8 10. When US dollars are needed in three months, the company will purchase foreign exchange (exchange RMB for US dollars). In this way, the company bears the exchange rate risk while doing two foreign exchange settlement and sale transactions. If RMB depreciates to 8. 15 after three months, the company must convert RMB 8150,000 into USD100,000, resulting in a loss of RMB 50,000. After China Bank started the swap business, the company can take the following measures to hedge the risk: make a three-month USD-RMB swap foreign exchange transaction: immediately sell USD 6,543.8+0,000 to buy the corresponding RMB, and agree to sell RMB 6,543.8+0,000 three months later. Assuming that the three-month annual interest rate of USD is 3% and the three-month annual interest rate of RMB is 1.7%, the number of exchange points and the risk level of financial products obtained by China Bank by using interest rate parity plus risk expectation are -450, and the cost of customers' exchange of USD is fixed at 8.055. In this way, the company solved the problem of liquidity shortage, and also achieved the purpose of fixing exchange costs and avoiding exchange rate risks.