Currency Swap
/ˈkɜːrənsɪ swɒp/
Definitions
- (n.) A financial agreement between two parties to exchange principal and interest payments in different currencies over a specified period.
The companies entered into a currency swap to hedge against foreign exchange risk.
- (n.) A derivative contract allowing parties to exchange cash flows in different currencies, often used for managing currency exposure in international finance.
Banks use currency swaps to match liabilities with assets denominated in various currencies.
Forms
- currency swap
- currency swaps
Related terms
See also
Commentary
Currency swaps are distinct from foreign exchange swaps primarily in their longer-term structure and inclusion of both principal and interest exchanges.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.