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Microcap & Penny Stocks : Madera International - Symbol WOOD
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To: Spider Valdez who wrote (1584)3/30/1999 12:05:00 PM
From: Dean Dumont   of 1979
 
Education time. What you are stating is a deriv's deal. Pretty plan vanilla stuff possibly.

its called a currency swap.

Bank A (US bank) needs Brazilian currency. Bank B a (Brizilian bank) needs dollars. bank a is the US Subsid. bank b is the Braz. Sub

So what do they do Gary? How does it work. Are you trying to say that these companies deal in derivatives? Currency Swaps, or Currency Options?

US DOLLARS---->
Bank A<------------------------->Bank B

<----Braz. Currency
Bank B<------------------------->Bank A

Now, what are they two banks in this transaction going to do to

1. Hedge the possibility of a currency swing?
2. What interest reate are they going to use?
3. Who are the counter parties?

$10,000,000 @ 11%
bank A ------------------------> Bank a
100,000,000 @ 15%
bank B ------------------------> bank b

OR

$ loan
Bank A ------------------> Bank B
Brazilian Loan
Bank A <------------------ Bank B

So how are these companies getting US dollars into Brazil?

Just a question now.
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