A currency swap can

Question

A currency swap can

Quizplus · Accepted Answer

A currency swap involves exchanging one currency for another at an agreed-upon rate, with the intention of swapping back at a future date. This can be used to reduce foreign exchange risk, as it allows companies to lock in a favorable exchange rate and avoid fluctuations in currency values. It does not necessarily make foreign goods more expensive in the domestic market, nor does it make domestic goods more expensive in foreign countries. It may have some impact on the foreign exchange rate, but the intention is typically to reduce volatility rather than increase it. Therefore, the best choice is C.

A Currency Swap Can