FX Swaps

(1)an FX swap consists of a simultaneous spot and forward transaction;

(2)these swap transactions can extend (roll) an existing forward position to a new future date;

(3)rolling the position forward leads to a cash flow on settlement day. This cash flow can be thought of as a mark-to-market on the forward position.

An FX swap is simply the combination of a spot and a forward FX transaction (i.e., only two settlement dates—spot and forward—are involved).

A currency swap is generally used for multiple periods and payments.