Yep was all very tragic Chicama, many, many farmers lost...

Yep was all very tragic Chicama, many, many farmers lost everything with the AUD value of their loans doubling in a short space of time.

Although Westpac is the bank most remembered for this fiasco, in fact all of the majors were involved.

Irony is that at the time, due to the then prevailing tax laws, they would have been better off borrowing a high interest rate currency - several at the time were around 30%-40%.

A taxation "loophole" existed in that interest costs were tax deductable whereas FX hedging costs/benefits were not. Therefore one would borrow at 35% and claim that as a deduction. As part of the deal (to hedge the FX risk) then simultaneoulsy arrange an FX swap where you would also pick up the interest differential - which was not even taxed.