A five-year plain-vanilla idrusd cross-currency swap

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Counterparty A is an American company with manufacturing operations in Indonesia and its main customers in the United States, while counterparty B is an American company that manufactures its goods domestically and exports solely to Indonesia. Which one of the following transactions with either counterparty will be a wrong-way exposure for a bank?

A. A five-year plain-vanilla IDR/USD cross-currency swap between the bank and counterparty A where the bank is USD interest rate receiver.

B. A five-year plain-vanilla IDR/USD currency option sold by the bank to counterparty A for it to buy IDR at a certain rate.

C. A five-year plain-vanilla IDR/USD cross-currency swap between the bank and counterparty B where the bank is USD interest rate receiver.

D. A five-year plain-vanilla IDR/USD currency option bought by the bank from counterparty B for the bank to buy IDR at a certain rate.

Reference no: EM13568866

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