The Greyon Bank in Australia has an excess balance of euros but is in need of dollars.Similarly,Huran Bank in the US has an excess of dollars and is currently in need of euros.The two banks agree to exchange euros for dollars now and dollars for euros at a later date.This type of foreign exchange transaction is an example of _____.

Question

Quizplus · Accepted Answer

This transaction is an example of a currency swap, where two parties exchange currencies now and agree to reverse the transaction at a later date.

The Greyon Bank in Australia Has an Excess Balance of Euros