A currency swap is the most common type of forwarding trade. With the understanding that they will reverse the trade later, one party exchanges currency for another for a predetermined period. The contracts for these products are not standard, and they aren't traded on an exchange. To keep a position active until the trade is completed, a deposit is required.

A currency swap is a financial agreement between two parties to exchange principal and interest payments in different currencies. Typically, one party will make payments in a foreign currency, while the other does so in their domestic currency. The swap allows both parties to hedge against currency risk, manage debt, or gain access to lower interest rates.

The exchange of principal occurs at the start and end of the agreement, while interest payments are exchanged periodically. Currency swaps are often used by multinational corporations or governments to optimize borrowing costs or hedge against fluctuations in exchange rates. They are distinct from interest rate swaps, which only involve the exchange of interest payments in the same currency.

A currency swap is a financial agreement between two parties to exchange principal and interest payments in different currencies for a set period. It allows institutions or governments to access foreign capital at better rates and hedge against exchange rate fluctuations. Typically, one party borrows in its domestic currency and lends an equivalent amount in another currency to the counterparty. Throughout the contract, both exchange periodic interest payments, usually based on floating or fixed rates, and return the original principal at maturity.

Currency swaps are commonly used by multinational corporations and financial institutions to manage currency exposure and financing costs without directly entering foreign debt markets. Unlike simple spot or forward trades, swaps extend over longer terms and involve both interest and principal exchanges, making them effective tools for long-term hedging and international funding.