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Tuesday, October 21, 2014

buy/sell USDJPY means borrow USD, near-date to far-date

label – intiuitive

 

Get an intuitive feel – a FX swap of "buy/sell CC1CC2" is basically borrowing CC1 pledging CC2 as collateral.

 

Very often, CC1=USD. A lot of market participants need to borrow USD, presumably to buy oil, gold, US stocks and US gov debt.