Back-to-Back Loan

In doing business with people or companies overseas, particularly with companies in countries with unsettled political and/or economic environments, the two parties may wish to do their business in their respective currencies. My friend in Chile may want to use the Chilean pesos, being "sure" the peso will soar against the U.S. dollar. An American may think the U.S. dollar will remain stable against the Chilean peso.

Each party is seeking to make the deal more favorable, hoping that the currency fluctuation will be in their favor. Same maturity date, just two loans.