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Motivations for counterparty to enter into the currency swap

Specify the basic motivations for the counterparty to enter into the currency swap.

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One basic reason for counterparty to enter in the currency swap is to exploit the comparative advantage of other in obtaining the debt financing at the lower interest rate than could be obtained on its own. Second basic reason is to lock in long-term exchange rates in repayment of debt service obligations denominated in the foreign currency.

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