Nippon Credit Bank and Bankers Trust New York Corp. have begun a currency swap service for Japanese companies operating in Southeast Asian countries with volatile currencies, a spokesman for the bank in New York has confirmed.
According to Reuters, Japanese firms' local-currency-denominated credits to vendors can be swapped for U.S. dollars, enabling Japanese firms to repay U.S.-dollar-denominated loans received from a bank for local operations without exchange rate risk.
Contracts for the new service can run to a maximum of seven years, compared with one to three years for conventional currency swap contracts, a Nippon Credit Bank spokesman said.
The fee for the new service will be less than 0.1% of the principal of a loan, he said.
A Japanese manufacturer operating in Indonesia signed up last month for the new service, the spokesman said.