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Dual currency swap
A cross-currency swap in which one of the counterparties is either required or entitled to make the final exchange of principal, based not on the same two currencies of the initial exchange, but on one of these two currencies and a third currency.
For example, each counterparty initially exchanges an amount in a given currency for an equivalent amount in another currency, say 10 million Canadian dollars for an equivalent amount in Japanese yen. At specified future dates, each counterparty receives interest flows in dollars or yen, as the case may be, on the principal paid initially and, conversely, pays interest flows in yen or in dollars on the principal received initially. At maturity, one of the counterparties receives from the other the principal paid initially, for example the 10 million dollars, but pays the other counterparty an equivalent amount in another currency, for example in euros.