Forward Swap - Explained
What is a Forward Swap?
Written by J. Mance Gordon
Updated at April 22nd, 2024
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What is Forward Swap?
A Forward swap is an agreement whereby two parties exchange or swap assets or cash flows from investments at a specified date in the future. The unique aspect of a forward swap is that the exchange takes place at some point in the future - as opposed to at the time of signing the swap agreement.
Forward swaps are commonly used in interest rate swap agreements. This is because investors may have a different projection about what interest rates will do in the future.