The forex swap is the interest earned or paid by an investor who holds an overnight position in a forex transaction. If the purchased currency’s interest rate is higher than the sold currency’s interest rate, you can earn a swap, otherwise, you need to pay a swap.
A forex swap is usually given directly on the forex platform. The specific calculation method is as follows.
Monday: one day swap. Positions are held from Monday to Tuesday, with settlement days from Wednesday to Thursday, and one-day interest is paid/charged.
Tuesday: one day swap. Positions are held from Tuesday to Wednesday, with settlement days from Thursday to Friday, and one-day interest is paid/charged.
Wednesday: three days swaps. Positions are held from Wednesday to Thursday, with settlement days from Friday to the following Monday, and three days of interest are paid/charged.
Thursday: one day swap. Positions are held from Thursday to Friday, with settlement days from the following Monday to next Tuesday, and one-day interest is paid/charged.
Friday: one day swap. Positions are held from Friday to the following Monday, with settlement days from Tuesday to Wednesday, and one-day interest is paid/charged.
There is no swap on holidays, but the swap is calculated for the additional day on the two business days before the holiday. Generally, a holiday Swap is calculated when the currency involved in the transaction meets an important holiday in the relevant country. For example, on July 4, the U.S. Independence Day, U.S. banks are closed, and all positions in U.S. dollar currency pairs are calculated at 5 p.m. on July 1 for an additional day of the swap.
