A currency swap in which one side is a fixed rate currency and the other a floating rate payment (such as U.S dollar LIBOR). This type of swap combines the features of a currency swap and an interest rate swap. In cross currency swaps, a loan denominated in one currency and effected at a fixed rate is typically swapped for a floating rate loan denominated in another currency. A cross-currency swap has two principal amounts, each denominated in a different currency. The exchange of principal at inception is optional (i.e., the initial principal amounts can be exchanged or not depending on counterparties agreement). However, it is essential that the counterparties agree to exchange principal amounts at the swap’s maturity date.

Cross-currency swaps have various names including currency coupon swaps, circus swaps and XCCY swaps.