Introduction

IRS refers to the same currency swap between the different calculating methods of interest rates, without the exchange of principal, mainly used for hedging interest rate risk

Example

One client take USD loan , through IRS, client can convert loan interest rate exposure from floating to fixed to mitigate risks caused by the rise of interest rates; or client can convert loan interest rate exposure from fixed to floating to reduce its loan cost.

Main Risk

Once the future interest rate is not consistent with your expectation, you may suffer loss.