Cross-Currency Swap

A Cross-Currency Swap (CCS) is a contractual agreement between two parties to exchange principal and fixed or floating interest payments denominated in two different currencies, effectively combining a foreign exchange transaction with two interest rate swaps. This over-the-counter derivative is primarily used by multinational corporations and financial institutions to manage long-term foreign exchange risk and to access funding in a foreign currency at a more favorable rate than they could obtain directly in that market.