Foreign exchange swap

A transaction which solely involves:

(A) An exchange of two different currencies

1. on a specific date
2. at a fixed foreign exchange rate which is pre-agreed at the outset of the contract; and

(B) A reverse exchange of the same two currencies

1. on a later pre-specified date
2. at a fixed exchange rate which is usually different and which is also pre-agreed at the outset of the contract.

The uses of foreign exchange swap contracts include the transformation of short term borrowings or deposits from one currency into another.

Not to be confused with a Swap, which is different.

See also

• Foreign exchange
• Swap
• CertICM