Introduction to Swap Rates

The swap rate consists of the interest rate differential between two currencies in the parity traded in the forex market. For example, if an investor who trades in EURTRY parity makes a sell transaction and moves his current position to the new date, he will earn swap income. This is because it buys the high-interest rate currency (TRY) and sells the low-interest rates swap currency (EUR). In Forex markets, the term swap is referred to as overnight carrying cost/overnight interest rate swap. All currency pairs traded in Forex markets have swap costs. While calculating forex swap rates, the interest differences between the currencies of the two countries will be taken into account. 

When are swaps charged?

Since the markets are closed on the weekend, and the open positions in the pairs are valued for 2 days, a 3-day swap is applied when switching from Wednesday to Thursday on weekdays. In short, rolling from Wednesday to Thursday, a 3-day swap cost is applied, covering Saturday, Sunday, and Monday, including the weekend. Rolling costs may also differ according to currency pairs. Swap dates will also vary when markets in a currency's country are on holiday. 

FairMarkets clients can follow the swap rates for long and short positions for each product in MetaTrader platforms.