Forward swap definition
Forward swap. The first cash flow takes place in the “far” future, “long” after the terms of the swap have been negotiated. • There are four types of basic currency swaps: – fixed for fixed. – fixed for floating. – floating for fixed. – floating for floating. • N.B.: It is the interest rates that are fixed or floating. • Typically, the NP is exchanged at the swap’s initiation and termination dates. • To convert a liability in one currency into a liability in another currency. • To convert an investment (asset) in one currency to an investment in another currency.