A currency swap is an agreement to exchange a principal amount of two different currencies and, after a pre-arranged length of time, to re-exchange the original principal.

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A currency swap is a type of financial derivative in which two parties agree to exchange a principal amount of two different currencies and then, after a pre-determined length of time, re-exchange the original principal. The purpose of a currency swap is typically to obtain funding in a foreign currency.

A Currency Swap Is an Agreement to Exchange a Principal