Kendara
Member
Cash: $ 3.50
Posts: 14
Joined: 14 Nov 2009
Location: Tokyo
|
| currency swap |
 |
|
I am not a native speaker of English.
I was asked by someone to translate an analyst's research note just because I am bilingual but there are some parts that are totally incomprehensible to me because I know absolutely nothing about investment.
It says:
Strategy: Receive 1-Year ccy RUB swaps at 7.02, S/L 7.42, Target 6.25%
Strategy: Buy USD/ZAR 1-mth vol at 20.3%, S/L 18.3%, target 23%
I believe ccy stands for currency, RUB and ZAR are russian and South Africa's currencies, respectively, and S/L means stop loss.
I guess 1-mth vol is one-month volatility.
Other than that, I am totally in the dark.
I don't even know why the target is lower than S/L in the first one.
Your help would be greatly appreciated!
|
Sat Nov 14, 2009 5:35 am |
|
|
coaster
Senior Advisor
Cash: $ 1318.80
Posts: 6496
Joined: 11 Oct 2005
Location: Wisconsin
|
|
|
|
Kendara, are you translating only, or do you want to understand the transaction? Your translation is perfect. Understanding the transaction is way beyond someone who "knows absolutely nothing about investment." Though I think perhaps you're being overly modest (or disingenuous) seeing as how you correctly got "ccy" and "vol".
Perhaps I could just explain the objectives without getting into all the nitty-gritty. These are my best guesses:
In strategy #1, the objective is profiting on a decline in interest rates of some debt security denominated in rubles. Probably Russian government debt; not sure. (The price of debt securities goes up when prevailiing interest rates go down.) One party receives a premium for taking the risk of an adverse change in rates; the other party pays the premium and is guaranteed the principal.
In strategy #2, the objective is profiting on an increase in the volatility of the exchange rate between the US dollar and the rand by taking a long position in something -- an option position? I don't know enough about forex to say for sure how this trade could be structured. In what I'm familiar with, it would be buying options. Volatility is price swings. The price of an option is partially due to volatility.
Interesting question, though I don't know why you'd need to know all that just for translation. I guess it doesn't matter. Maybe you're just curious about it. Inquiring minds want to know ..... 
And FWIW, your English is perfect.
~Tim~
Eye Candy : Why Whimsy
|
|
Sat Nov 14, 2009 6:44 am |
|
|
Elmira Nancy
Preferred Member
Cash: $ 26.90
Posts: 136
Joined: 01 Dec 2009
|
A currency swap is a financial instrument where two parties agree to exchange foreign currencies at specified times. You can think of it like selling a bond in one currency and buying a bond with the same payment dates in another.
TradeStation Review
|
|
Thu Jan 07, 2010 9:09 am |
|
|
|
