An OVERTHECOUNTER SWAP involving the exchange of two currencies. A typical currency swap involves the exchange of a fixed payment in one currency for a floating payment in a second currency, although the exchange of two fixed or two floating payments can also be arranged. Currency swaps involve the initial and final exchange of principal, which results in a high degree of CREDIT RISK. Also known as CROSS CURRENCY SWAP. See also CURRENCY DERIVATIVE.

More On This Topic

Link to This Definition
Did you find this definition of CURRENCY SWAP helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary