What is a swap rate?

The swap rate is a special kind of interest rate that is utilized for the calculation of fixed payments in a derivative instrument called an interest rate swap. An interest rate swap is a financial contract between two parties who agree to exchange interest rate cash flows based on a notional amount.

What is a foreign currency swap?

Usually, though, a swap involves notional principal that's just used to calculate interest and isn't actually exchanged. A foreign currency swap is an agreement between two parties to swap interest rate payments on their respective loans in their different currencies. The agreement can also involve swapping principal amounts of loans.

What is a swap spread?

Swaps are typically quoted in a swap spread, which calculates the difference between the swap rate and counter-party rate. Fixed Rate: This is a pre-determined interest rate that one party agrees to pay in an interest rate swap. It remains firm throughout the life of the swap.

How AUD/USD exchange rate is calculated?

The AUD/USD pair is charged in AUD. The amount would be then converted into the currency of your account. If your account is in another currency, for example, USD, you have to multiply or divide by the USD exchange rate: We are using the AUD/USD currency pair to find the exchange rate.