What is an FX swap from spot?
A) An exchange of two streams of interest payments in different currencies and an exchange of the principal amounts of those currencies at maturity
B) A spot sale (purchase) and a forward purchase (sale) of two currencies agreed simultaneously between two parties
C) An exchange of currencies on a date beyond spot and at a price fixed today
D) An agreement to buy (sell) an amount of base currency value spot and simultaneously resell (buy back) the same amount to the same counterpart value today

Question

Quizplus · Accepted Answer

An FX swap from spot involves a simultaneous spot sale or purchase of a currency and a forward purchase or sale of the same currency. This allows for the exchange of currencies at two different points in time, with the forward element being agreed upon at the time of the trade. Choice A describes an interest rate swap, choice C describes a forward contract, and choice D describes a same-day spot transaction.

What Is an FX Swap from Spot