Explain the operation and mechanics of a sterling

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The basic advantage of a currency swap is that it provides the firms long-term hedging cover against exchange rate risk by adding liquidity and contributing to the development of long-term forward markets for the major trading currencies.

Question (a) Although swaps have many advantages explain the and discuss the potential problems or drawbacks in utilising currency swaps.

Question (b) Explain the operation and mechanics of a sterling/euro swap.

Reference no: EM132578218

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