Swap Points

Swap points are the pips added to or subtracted from a spot exchange rate to produce the forward rate for a future value date, and they are what brokers use to price the rollover applied to positions held overnight. They come from the interest-rate differential between the two currencies rather than any forecast of direction: the higher-yielding currency trades at a forward discount, the lower-yielding one at a premium. Retail platforms usually translate swap points into a per-lot amount and display long and short swap separately, because the two are rarely symmetrical once the broker's own adjustment is built into the price. Swap points also shift with money-market conditions, so quoted values change over time rather than staying fixed.