Topic Details (Notes format)

Back-to-Back Loan

Subject: Economy

Description

A back-to-back loan is an agreement between two companies in different countries to borrow each other’s currency, reducing foreign exchange risk. Example: A U.S. company lends dollars to a Japanese company, which in return lends yen to the U.S. company, avoiding currency exchange fluctuations.

Summary

Back-to-back loans reduce foreign exchange risk by swapping currencies.