FX Swap

Product description

In managing currency risk exposures, FX swap is used to make positions in two various currencies equal, i.e. when there is, for a certain period of time, a lack of one currency and a surplus of another currency. The swap is an immediate exchange of one currency for another one, followed by a reverse exchange of these currencies at a given future date without an interest rate risk. It is a combination of spot and forward transactions carried out at the same time, or alternatively, a deposit in one currency and a loan in the other. The rates for both parts of the transaction, the purchase and sale, are fixed at the time when the transaction is concluded. The duration of the swap can be from one day to one year.

The minimum value of this transaction is EUR 50,000, or its equivalent in another convertible currency.

Who provides information

Treasury Department