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FX swap pricing infographic showing EUR/USD spot rates, positive and negative swap points, and calculated forward exchange rates.

How are swap points used to price FX swaps?

How are swap points used to price FX swaps? Swap points price an FX swap by expressing how far the far-leg exchange rate sits above or below the near-leg exchange rate. For a conventional spot-starting structure, the raw differential is

FX swap diagram showing USD exchanged for EUR in the first leg and the reverse currency exchange at a future date.

How does the reverse leg restore the original currency position?

How does the reverse leg restore the original currency position? The reverse leg restores the original contractual currency principal by requiring the party to return the currency received on the near leg and receive back the currency originally supplied. From

FX swap currency flow diagram showing USD exchanged for EUR in the near leg and EUR exchanged back for USD in the far leg.

How do currency pairs move across the two legs of an FX swap?

How do currency pairs move across the two legs of an FX swap? Across an FX swap, the same two currencies move in opposite directions on the near and far legs. From Party A’s perspective, the near leg delivers Currency

FX swap diagram showing USD exchanged for EUR in the first leg and the reverse currency exchange at a future date.

How does the first leg create temporary currency access?

How does the first leg create temporary currency access? The first leg of an FX swap creates temporary currency access when the near-leg principal exchange settles: the participant delivers one currency and actually receives another currency that can then be

FX swap agreement linking near and far currency exchanges compared with separate spot and forward contracts on a tablet.

Why is a swap not just a loose combination of independent contracts?

Why is a swap not just a loose combination of independent contracts? An FX swap is not merely two independent FX contracts because its near and far legs are deliberately linked when the transaction is formed. The same currencies are

FX swap diagram showing one agreement connecting near and far settlement legs through linked contract terms.

How does one agreement bind the near leg and far leg together?

How does one agreement bind the near leg and far leg together? One FX swap agreement binds the near and far legs by creating both reciprocal currency-exchange obligations when the transaction is entered. From the beginning, the parties establish the