Axis Bank Treasury is a leading player in the foreign exchange market. Using sophisticated technology and experienced dealers we are able to provide the cheapest-to-deliver spot and forward prices to our clients.
It is the simplest and most common foreign exchange transaction widely used by corporates to cover their receivables and payables
Commitment by the client to buy and sell one currency against another at a fixed rate for delivery two business days after the transaction
This eliminates the possible risk due to exchange rate fluctuation for the client
Corporates can buy or sell foreign currency for genuine transactional purposes only
Forward Contract
Commitment by the client to buy or sell one currency against another at a fixed rate for delivery on a specified future date, or during a period
Corporates can buy or sell outright dollars to hedge genuine underlying exposure with certain restrictions
Onshore Interbank forward market is liquid upto to 1 year
Currency Swaps
A transaction in which the bank agrees to exchange specified amount of one currency for another currency on future dates at a fixed price
Cash flows can be exchanged for both principal and interest (cross-currency swap), interest only (coupon-only swap) and only principal (principal-only swap)
Interest Rates Swaps
A transaction in which the Bank contracts to exchange a fixed interest liability for a floating interest rate liability or vice versa on behalf of the client
No exchange of principal amount, only difference in cash flows are settled
Benchmark rates from NSE MIBOR, 1-year INBMK, 5 year INBMK rates are normally used
Currency Options
A currency option is an instrument, which gives the buyer the option the right to purchase (or sell) a specified currency at a specified rate
Call Options give the buyer the right to buy the currency at the contracted strike price and Put Options give the buyer the right to sell a certain currency at the contract strike price
Contract could be entered by the corporates having an underlying exposure
Forward Rate Agreement
FRA provides means for hedging the interest rate risk and is a contract for exchange of interest payments for a specified period from start date in the future to maturity date
There is no exchange of principal amount, only difference in cash flows are settled
The settlement is based on the agreed benchmark rate, which could be USD LIBOR, NSE MIBOR, 1 year INBMK, T-Bill rates etc.
