# Currency Swap

*Derivatives & Options — Finicade finance glossary*

A currency swap exchanges principal and interest payments in one currency for those in another, and unlike a rate swap the principal genuinely is exchanged. Corporates use it to borrow where they have the best access and end up with the currency they actually need. The cross-currency basis — the deviation from theoretical parity — is a closely watched gauge of dollar funding stress in the global banking system.

**Also known as:** cross-currency swap, FX swap, basis swap

**Related terms:** [Swap](https://finicade.com/glossary/swap), [Exchange Rate](https://finicade.com/glossary/exchange-rate), [Interest Rate Swap](https://finicade.com/glossary/interest-rate-swap), [Hedging](https://finicade.com/glossary/hedging), [Interest Rate Parity](https://finicade.com/glossary/interest-rate-parity)

**Taught in:** Quant Quest — Foreign Exchange

Source: https://finicade.com/glossary/currency-swap