FX SWAP

Forex SWAP is the combination of a foreign exchange deal and a future forward deal in the opposite direction. It consists of a spot FOREX transaction entered into at exactly the same time and for the same quantity as a forward FOREX deal. One currency is swapped into another currency for a period. One side of the swap (i.e., the forward rate) has a fixed rate in this transaction, while the other side (the spot rate) is variable; variable rate is the spot rate that is realised daily. Currency exchange rates are affected by a wide range of factors, including national and international financial and economic conditions and political and natural events. The effect of normal market force may at times be countered by intervention by central banks and other bodies. At times, exchange rates, and price linked to such rates, may rise or fall rapidly.