extract from page 38
An investor wants to buy a foreign currency security with domestic cash but does not wish to run FX risk. Then, three transactions are equivalent. The agent may:
- combine a spot and forward FX deal, ie buy the required FX spot, purchase the security and sell the same amount of FX forward;
- use an FX swap, ie swap the domestic currency for the foreign currency and purchase the security;
- keep the domestic cash and finance the security by borrowing in the foreign repo market, incurring outright debt.
I am a little confused about strategy 3, does it mean you lend your local ccy cash in exchange for the foreign security or something else?