FX Swap
a.k.a. Foreign exchange swap
Two linked currency trades: swapping currencies now and swapping them back at a set rate on a later date.
In plain English
Two linked currency trades: swapping currencies now and swapping them back at a set rate on a later date.
An FX swap pairs a spot trade with a forward in the opposite direction. A bank that needs dollars for a month might swap euros for dollars today and agree to swap back in a month.
FX swaps are the single biggest slice of global currency trading by volume. They are how banks fund themselves in other currencies. Not to be confused with the overnight swap charge on a retail position.
Keep this word for good
Your free Private Swap Lounge saves the terms you’ve learned and quizzes you on them. Portal under construction. Expected delivery date is December 01, 2026.