Forex swap

Encyclopedia : F : FO : FOR : Forex swap

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Foreign Exchange

Exchange Rates Currency band Exchange rate Exchange rate regime Fixed exchange rate Floating exchange rate Linked exchange rate

Markets Foreign exchange market Futures exchange

Products Currency Currency future Forex swap Currency swap Foreign exchange option

A Forex swap is an over the counter short term interest rate derivative instrument.

It is the most heavily traded product on the foreign exchange market. If combined with a spot transaction, a Forex swap becomes equivalent to an outright forward foreign exchange transaction.

It should not be confused with a currency swap, which is a much rarer, long term transaction, governed by a slightly different set of rules.

In emerging money markets, Forex swaps are usually the first derivative instrument to be traded, ahead of Forward rate agreements.

 

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