Currency swap combines a spot transaction and a currency forward. The seller sells a specific amount in one currency against the payment of the agreed amount in another currency normally with the settlement of both the obligations within 2 business days and, concurrently, the seller buys back the same amount of this currency with a settlement at a specific time in the future.
Both the forward exchange rate and the date of settlement are binding upon the seller and the buyer. The two transactions are arranged at the same moment.
The future exchange rate is established based on the spot rate of a given currency pair, the number of days until settlement, and the interest rates of each of the currencies.