swap rate
Definitions (2)
1. The difference, whether positive or negative, between the forward exchange rate and the spot rate for a given currency, usually expressed in points.
2. In the case of an interest rate swap, the market interest rate paid by the party responsible for the fixed payments. In general, a well-defined market rate exists for this payment, and when a swap is initiated, the fixed rate paid is usually quite close to the market swap rate. However, as the swap matures the fixed rate paid on the swap stays constant, while the swap rate might change, and these two rates can diverge.
Use swap rate in a sentence
“ The swap rate in our country is higher than in other countries because the market is not as well-defined or easy to predict. ”
“ Since the swap rate was so low, they anticipated that the future rate would not be increasing and would be close to the spot rate for the currency. ”
“ The swap rate of the dollar was trending in the negative direction and it caused Mr. Jones to hesitate about taking that business trip to the United Kingdom as he had planned. ”
