Currency Swaps and Australian Debt Management Practice
Credit, Currency, or Derivatives: Instruments of Global Financial Stability Or crisis?
ISBN: 978-1-84950-601-4, eISBN: 978-1-84950-602-1
Publication date: 9 November 2009
Abstract
This case study examines the controversial practice by the Commonwealth of Australia during the period 1988–2002 of using currency swaps as part of its debt management strategy. Although the strategy provided a positive return overall, the impact of currency swap usage created significant year-by-year variations in returns, which posed a risk to debt interest and financing requirements. This suggests that the risk limits imposed on this strategy were both inappropriate and insufficient. Nonetheless, these findings provide insights into how such a policy could best be implemented given recent proposals (OECD, 2007) for derivatives use by public debt managers.
Citation
Yusuf, A. and Batten, J.A. (2009), "Currency Swaps and Australian Debt Management Practice", Choi, J.J. and Papaioannou, M.G. (Ed.) Credit, Currency, or Derivatives: Instruments of Global Financial Stability Or crisis? (International Finance Review, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 293-327. https://doi.org/10.1108/S1569-3767(2009)0000010013
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited