Cross-currency swaps risky for hedging foreign exchange, study finds.
Basis swaps between the U.S. and emerging economies don't fully protect against exchange rate risks. It's better to use a basis swap between U.S. Libor and Euro Libor for lower risks. When using a cross-currency basis swap, you need to consider exchange rate trends and risks. Offshore funding isn't as good as onshore funding in a local currency for operations.