Currency Swaps

A currency swap is a financial agreement between two parties to exchange principal and interest payments in different currencies over a specified period. Essentially, they agree to swap one currency for another at a certain rate initially, and then reverse the exchange later, often with interest payments included. It's used to manage currency risk or secure better borrowing terms in different currencies without needing to convert funds in the open market. Currency swaps help companies or governments finance operations internationally more efficiently and mitigate exposure to currency fluctuations.