Definition for : Currency swap (with principal)

Currency Swap, one of the Currency risk management techniques, is the simultaneous purchase of an amount of a currency (Principal amount) for a Spot date and the sale of the same amount of the same currency for forward settlement. The difference in exchange rates reflects the difference in Interest rates paid on each currency participating in the currency Swap. See also Swap points.
(See Chapter 49 Managing cash flows of the Vernimmen)
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