Circus Swap

Definition

Forex

  • A derivative, also called a cross currency swap or a currency coupon swap, in which a fixed-rate loan in one currency is swapped with a loan in another currency with a floating interest rate. This type of swap allows the foreign exchange trader with the fixed rate loan to benefit from a decline in the interest rate of the second currency, or for the trader with the floating loan to protect against increasing interest rates in the first currency.
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