Changes in swap rates in forex trading can be explained by various factors.
Some fundamental reasons that contribute to changes in swap rates include:
- Interest rate differentials.
- Market volatility or lack of clear trends.
- Economic and political events.
- Trader sentiment.
- Trading hours.
Note: If one side of the currency pair has a positive swap rate while the other has a negative swap rate, the net result may still be negative. This represents the cost of borrowing one currency to buy another. However, the extent of the negative swap rate also depends on various other factors.