It refers to a contract that the two tradingpartiesagree to buy or sell a certainamountofcurrency at a fixed date in the future at a specified exchange rate.
Swaps are privately negotiated trades between two parties to exchange cash flows on specified payment dates during the agreed-upon life of the contract.
In exchange for the stock the grantor takes back a promissory note, again bearing a government-specified rate of interest (currently less than 1% for a nine-year note) that locks the value of the stock in at the time of the transfer.