Forex Swap Rates- What Are They?

To understand what swap rates are, they are actually the interest rates which are embedded as differentials within the currency trades.

Also referred to as rollover rates, your swap rate is recognized as the interest amount paid for keeping a position for some time. There is an interest rate which is connected to every currency in the world. Forex trade involves trading in the market with currency pairs. This means that each trade activity will involve two sets of different currencies and their distinctive interest rates.

You will be able to earn a positive roll, if you buy a currency with a higher interest rate compared to the one you actually sell in the market. On the other hand, if the interest rate of the currency you sell is less than the rate of the one you bought, then you will have a negative rollover. Every trader needs to note that the rollover process can add in some profit or an additional cost, depending on your trade activities.

To explain the forex swap rates idea further, take the example of forex trade. One currency is borrowed to buy another one. Any trader who buys USD/JPY, in actual borrows Japanese Yen to buy U.S. dollars. In this process, you have to pay interest on the Japanese Yen which are borrowed, and also earn interest on the bought dollars.

ForexRay Swap Rates Are Visible On MT4

All the swap rates are easily visible to all our clients through our multiple platforms. You can check on the forex swap rates on our MT4 platform easily by following the simple steps,

  • Tap on the ‘view’ option present in the top menu
  • Choose the symbols
  • Choose the currency pair for which you need to view the forex swap rate price
  • Then click on the ‘properties’ option
  • Both the short and long forex swap rates will open up within the pop up window option

Steps To Calculate a Swap Rate

The debits and credits involved with a swap rate can be calculated as follows,

Current short or long forex swap rate * total no. of lots : swap rate for credit and debit in the second currency

First example

If the account currency is USD and a trader has one long lot in USD/JPY, then as per the calculations,

:+ 0.93*1 : ¥0.93, when converted to U.S. dollars the amount is $ 104.669

Second example

If currency pair is same USD/JPY and trader has 2.5 short lots,

: -1.04* 2.5: ¥ 2.6, which is $ -292.458

Time to Calculate Swap Rates

We calculate and estimate our swap rates everyday at the predetermined and set timing. All swap rates are held to be tripled on Wednesdays in order to take weekends into account. With this standard structure working, some modification may be brought about to take in the impact of a holiday.

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