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Swap points

The premium or discount added to the current rate to turn it into a rate for a future date.

How to read the number

They express the difference between two interest rates: the currency with the higher rate trades cheaper forward against the one with the lower.

When the metric lies

They are read as a forecast, and they are not one. The points merely equalise two returns, so seeing the market's expectation of a future rate in them is a common misreading.

Also known as: forward points

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