An agreement is an agreement between the central banks of two countries to agree on a certain amount of money in exchange for a certain amount at a certain time.
Currency swap agreement generally includes: time, exchange rate, quantity, currency type.
In a currency swap, the two parties do not lend to each other, but instead agree to sell currency to each other with a promise to exchange it back at a fixed future date.
“Sino-japanese currency swap” the purpose is to reduce financing costs between the two countries in the international market and reduce the risk of exchange rate changes caused by the loss, after all, in the international trade settlement currency, trade between countries was the main currency, currency swap between the two countries can avoid falling into dollars again after trading costs, is a win-win situation.
The signing of the currency swap agreement between China and Japan is conducive to maintaining the financial stability of the two countries, supporting the development of bilateral economic and financial activities, not only saving costs and preventing exchange rate risks, but also conducive to the process of currency internationalization.
