By Mike Duncan | December 2025
Different tools for different jobs
FX swaps and cross-currency swaps are not interchangeable. They sit in different markets, solve different problems, and do different things.
FX Swap
An FX swap patches a currency gap. It does not exchange interest cashflows, does not align with long-dated asset economics, and offers no protection against the compounding cost of repeated rolling. Beyond two years, liquidity deteriorates fast and the economics of rolling dominate the hedge outcome.
Cross-Currency Swap
A cross-currency swap transforms a balance sheet. It locks FX conversion, exchanges interest cashflows for the full life of the transaction, and removes path dependency entirely. That is a structurally different objective.
When a long-dated problem is solved with a short-dated instrument, the cost does not appear immediately. It accumulates through carry leakage, roll friction, and governance surprises. By the time it is visible, the portfolio has already paid for the mismatch many times over.
Read the Executive Brief
FX Swaps vs Cross-Currency Swaps
