Expecting demand of usds to increase


Problem: A 5-year Cross-Currency Swap (CCRS) is being quoted -45.125 -40.125 (against 3m reference rates). You are expecting the demand of USDs to increase so that to anticipate to the market movement:

a) You will buy the CCRS at -40.125

b) You will buy the CCRS at -45.125

c) You will sell the CCRS at -40.125

d) You will sell the CCRS at -45.125

Assume is a CCRS of EUR/USD. If the demand for USDs increases, the $ will appreciate. Hence, I would want to make a CCRS in order to cover myself from such dollar appreciation.

 

 

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Finance Basics: Expecting demand of usds to increase
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