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The Abbay Bank SC in Ethiopia has an excess balance of euros but is in need of dollars. Similarly, Statewide Federal in the US has
The Abbay Bank SC in Ethiopia has an excess balance of euros but is in need of dollars. Similarly, Statewide Federal in the US has an excess dollars and is currently in need of euros. The two banks agree to exchange euros for dollars now and dollars for euros at a later date. This type of foreign exchange transaction is an example of
currency hedging
spot transaction
currency swap
forward transaction
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