Forex swap

A foreign exchange (FX swap) is a financial market operation of a foreign exchange spot contract (FX spot) and a forward exchange contract (FX Forward) exists. There are two currencies at spot can be exchanged against each other and exchanged back at a later time. Both transactions in a foreign currency swaps are completed simultaneously and with the same counterparty.

In contrast, a currency swap is an exchange of principal amounts in different currencies, including the related interest payments.

Example of a foreign exchange swap

Party A Party B sells 100 million U.S. dollars for payment in euros at the spot rate; both at the same time agree to buy back the USD by Party A in 1 month for now valid exchange rate.

  • Financial market activities
  • Risk Management ( Bank)
  • Foreign exchange market
Capital (economics) Derivatives market
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