# Swap Rate

SwapRate(SwapRateorSwapPoint)Swap Rate Overview Swap forex cashback easy refers to a particular currency, the difference between the 100%cashbackforex rate and the cashback forex rate, either positive or negative, usually represented by points in fact " cashbackforexpip rate" from the "interest rate" between the two trading currencies Level difference" Th cashbackforex difference can be expressed in the form of forexcashbackeasy rate, also known as the swap rate between the two currencies in a certain period of time Banks in foreign exchange transactions usually use the swap rate to mark the price of forward foreign exchange, and report the buy and sell two kinds of swap rates, generally reported the third and fourth digits after the decimal point from the order of the swap rate can be seen in the forward exchange rate is a rise or a discount in the direct marking method, the swap rate is arranged in order such as from small to large, that is, the buy swap rate is lower than the sell swap rate, the forward foreign exchange for the rise, and vice versa for the discount in the indirect marking method, the swap rate is arranged in order such as from large to small, that is, the sell swap rate is higher than the buy swap rate, the forward foreign exchange for the rise, and vice versa for the discount swap rate calculation method 1, the swap rate calculation method The swap rate calculation has two different ways. One is based on the concept of interest rate differential, the other is based on the concept of interest rate parity theory 1. The formula based on the concept of interest rate differential is: Swap rate calculation = (forward rate - spot rate) / spot rate × 360 / forward contract days 2. -2. Calculation of the swap rate of irregular days The swap rate of irregular days is often calculated using the average number of days method, and its calculation process can be divided into four steps: (1) find the swap rate of the two regular days before and after the closest irregular days (2) calculate the difference between the swap rate of the two regular days before and after and the number of days between the two delivery dates, to the swap rate (3) Calculate the number of days between the irregular days delivery date and the previous regular days delivery date, multiply this number of days by the swap rate for each day obtained to obtain a swap rate (4) Add this swap rate to the swap rate for the previous regular days to obtain the swap rate for the irregular days Swap rate formula The swap rate formula can be divided into: S --I1 is the denominated currency rate; I2 is the base currency rate; T - the number of days; D - the swap rate In the above formula, if the denominated currency rate is greater than the base In the above formula, if the denominated currency interest rate is greater than the base currency interest rate, the interest rate difference is positive, when the forward rate minus its spot rate is greater than zero, called the lift; if the denominated currency interest rate is less than the denominated currency interest rate, the interest rate difference is negative, when the forward rate minus its spot rate is less than zero, called the three forms of discount swap rate It has three forms: ① When the forward rate is higher than the spot rate, called the "lift "When the forward rate is higher than the spot rate, it is called "AtPremium"; ② When the forward rate is lower than the spot rate, it is called "Discount" or "AtDiscount" ( When the forward rate is the same as the spot rate, it is called the parity (AtPar) Swap rate quotation method The swap rate quotation method is different from another quotation method, in which the bank first quotes the spot rate, and then quotes the points (i.e. swap rate) on the basis of the spot rate, and the customer adds or subtracts the points from the spot rate to get the forward rate. After giving the points, the customer calculates the forward exchange rate of the key is to judge the points added to the spot rate or subtracted from the spot rate points, the principle of judgment is to make the difference between the purchase and sale of forward foreign exchange is greater than the difference between the purchase and sale of spot foreign exchange, because as a bank, engaged in foreign exchange transactions, the main source of profit is the difference between the purchase and sale of foreign exchange, the risk borne by the bank in the forward foreign exchange business than in the spot Foreign exchange business risk than in the spot foreign exchange business, and therefore also requires a higher return, the performance of the foreign exchange price is the forward foreign exchange trading spread to be larger than the following example: Example 3.3 in 2004 a customer to the bank inquiry, the bank with swap rate markup method quoted forward pound prices: Spot1.7540/50; 30-day2/3; 90-day28/30; 180-day30/20 day30/20 Consider the 30-day forward exchange rate, try the addition method, the forward exchange rate of 1.7542/53, the bid-ask spread of 0.0011, greater than the spot foreign exchange bid-ask spread (O.0010), can be ruled that the addition method is right; then try the subtraction method, the forward exchange rate of 1.7538/47, the bid-ask spread of 0.0009, less than the spot foreign exchange bid-ask spread The subtraction method can be judged to be wrong; similarly, the 90-day forward exchange rate should also use the addition method, while the 180-day forward exchange rate, the results of the attempt show that the subtraction method should be used. day1.7542USD1.7553USD90-day1.7568USD1.7580USD180-day1.7510USD1.7530USD As can be seen from the above example, when the points in front of the slash of the swap rate given by the bank are lower than the points behind the slash, the points of the swap offer should be added to the spot rate, at which point if it is in the direct Under the markup method, the forward foreign exchange gain; if the indirect markup method, the forward foreign exchange discount on the contrary, when the bank gives the swap rate points in front of the slash is higher than the points behind the slash, the swap offer points should be subtracted from the spot rate, at this time in the direct markup method, the forward foreign exchange discount, in the indirect markup method, the forward foreign exchange gain