Internet Banking

Currency Swaps

  • A Currency Swap Contract is a contract which includes exchange of a currency between two parties within a specified timeframe at defined rates.
  • Currency swap is a two legged transaction. It constitutes of a spot and a forward transaction. Spot transaction is effected on the day the contract is signed, and it involves buy/sell of a currency at the specified rate. The opposite of the transaction is undertaken at a rate and on the date again specified on the first day of the contract (forward contract).
  • This exchange is carried out in order to benefit from the higher interest rate provided by one currency of the pair eliminating the currency risk during that timeframe.