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Example of a Currency Swap and How it can help Trade

A Currency Swap is a pact between two countries that allows trading in their own currency and payments to import and export trade at pre-determined exchange rates without bringing in a third currency.

How does a Currency Swap Agreement work..??

At the start of a swap, central bank 1 sells a specified amount of currency A to central bank 2 in exchange for currency B at the prevailing market exchange rate..

Central bank 1 agrees to buy back its currency at the same exchange rate on a specified future date.. Central bank 1 then uses the currency B it has obtained through the swap to lend on to local banks or corporations..

On the specified future date that the swap unwinds and the funds are returned, central bank 1, which requested activation of the swap, pays interest to central bank 2..

While the terms of swap agreements are designed to protect both central banks involved in the swap from losses owing to fluctuations in currency values, there are some risks that a central bank may refuse, or be unable, to honor the terms of the agreement..

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Why Cargo Insurance and Insurers Matter

Cargo insurance is a type of insurance that covers/compensates a buyer or seller of goods against cargo damage or loss of cargo.

Despite insurance having been around for centuries, there is still a feeling that any form of insurance is a “grudge purchase”.

By its nature, insurance is an intangible benefit, one that can only be tested under adverse circumstances and there is nothing more adverse than cargo damage..

From a

  • Local (Street to Street, City to City, Town to Town) shipment;
  • to Provincial shipment within the same province/state;
  • to National shipment within the country;
  • to Regional trade within regional trade blocs like EU, BRICS;
  • to Global trade between countries

there are several modes and types of trade/shipments around the world..


Although it may seem obvious, it is shocking to see how many customers still do not take the right Cargo Insurance to cover their cargo comprehensively..

I don’t think this lack of proper insurance cover is intentional, but may be due to ignorance or lack of knowledge on the part of the client as far as Cargo Insurance goes..

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