SwapBack to Glossary
In FX a swap is a contract between two parties where they effectively swap the same amounts of two different currencies by lending one and borrowing the other. The repayments are set at a fixed date in the future and take place at the forward exchange rate both parties agreed to. If a company needs to settle a debt in a foreign currency and doesn’t want the risk of holding foreign exchange reserves, it can initiate a swap in order to meet its obligations.
Find our Glossary interesting?
If you feel we’ve missed a term; let the Traders Expert team know and we’ll include it in our Glossary.