Cross currency swaps

A cross currency swap is a financial agreement where two parties exchange interest payments and principal amounts in different currencies over a set period. Typically, they agree to pay interest in their own currency while receiving interest in the other currency, with the principal amounts also exchanged at the start and end of the contract. This helps both parties manage currency risk and funding costs, often used by companies or investors involved in international transactions to secure favorable rates and hedge against currency fluctuations.