Can anyone briefly introduce foreign exchange swaps?

Foreign exchange swap means that both parties agree to exchange currency A for a certain amount of currency B, and exchange currency B for the same amount of currency A at the agreed price in the future. Foreign exchange swaps are flexible and diverse, but they are essentially interest rate products. When one party changes to a high-interest currency for the first time, it is bound to compensate the other party. The amount of compensation depends on the interest rate difference between the two currencies. The way of compensation can be reflected by the exchange price due, or by paying the price difference separately.

The main function of foreign exchange swap business: it can be used for the early delivery of forward settlement and sale of foreign exchange, which solves the contradiction that forward settlement and sale of foreign exchange cannot be delivered in advance and makes customers' capital turnover more flexible. Through swap business, customers can convert RMB and foreign exchange according to the agreed spot exchange rate and value date, and vice versa, which can prevent exchange rate risks and preserve value.

Foreign exchange swap transactions require a bank account opening application to trade.