It means that the customer and the bank enter into an agreement on term, exchange rate, currencies, sum and direction. Both parties make a RMB/FCY settlement at agreed exchange rate at the beginning of term and agree to make a reverse settlement at another agreed exchange rate at the end of term. It may be considered as a combination of a spot settlement (or sale) of exchange and a forward sale (or settlement) of exchange.

1.Hedging: Currency with high interest rate may be exchanged through RMB swap transaction to realize effective use of capital with high interest rate and value preservation and increase of foreign exchange. 2.Adjustment of cash position: RMB swap transaction may be used for fixing swap cost, evading risk of interest rate and solving the problem of shortage in RMB/FCY cash flow. 3.Adjustment of cash flow date: Maturity date for forward RMB-FX trading may be adjusted, which means extension or early ending of settlement date, through RMB swap transaction of the same sum and reverse direction.

1.Under the current account, FCY/RMB swap is applicable for foreign exchange receipts and disbursements, which may transact RMB-FX trading according to Regulations on Management of Settlement, Sale, and Payment of Foreign Exchanges. All the valid certificates required shall be furnished by the customer during the completion and delivery of FCY/RMB swap. 2.Under capital account, the following applies:

Compensation of CGB¡¯s foreign exchange loan;
Compensation of foreign loan registered with the SAFE;
Foreign exchange receipts and disbursements in direct investment registered with the SAFE;
Foreign exchange capital earning of foreign-invested enterprise registered with the SAFE
Foreign exchange earning of domestic institutions that go public out of China, registered with the SAFE
Other foreign exchange receipts and disbursements that are approved by the SAFE

3.For FCY/RMB swap during transaction of receipts and payments under current account and capital account, the customer shall furnish valid certificates of the above receipts and payments that are in conformance with the regulations on management of foreign exchange. Swap business is applicable for capital that has been deposited in the foreign exchange account (excluding the settlement of foreign exchange account, which is to be otherwise specified after the completion of account reform by the SAFE) under current account. Relevant valid certificates shall be furnished by the customer for capital in the foreign exchange account under current account for transaction of swap business if such capital is paid or used for specific purpose.

Near-end transaction rate = spot exchange rate, far-end transaction rate = spot exchange rate ¡À premium/discount points. The trade price for this shall be in conformance with the trade prices of all the branches.

A customer has entered a forward agreement of 3 months in April, in which the customer will purchase USD 1 million in July. If the customer wishes to make a 3-month extension of the swap (to be settled in October) in the third month, he/she may transact a swap of 3 months to 6 months, when the spot exchange rate is 6.8238 and the USD/RMB premium is 30 points within this period. No actual settlement happens in July between the customer and the bank through that swap. And the bank will buy USD 1 million from the customer at the rate of 6.8268 (6.8238 + 0.0030) and sell RMB in October.

Capital transaction credit line by CGB is required for the transaction of this service. For application of capital transaction credit line, please contact the relationship manger of the local branch.

RMB/foreign exchange rate

FCY deposit interest rate

RMB deposit interest rate

Inquiry at business outlets