Parallel Loan Definition

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Definition Of Parallel Loan:

parallel loan A lending arrangement in which two firms in different countries borrow one another's currency.
For example, a firm in country A makes a loan in its own currency to a firm in country B at the same time the firm in country B makes a loan in its currency to the firm in country A. The two transactions are designed to offset potential losses from fluctuations in currency exchange rates, but they do subject each participant to credit risk. Also called back-to-back loan.

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