if i am an us firm i entered a currency swap with an european firm, they give me 1 million euro at the beginning and I give them 1 million dollar, am i paying usd interest or euro interest, SO CONFUSED
And after a period, if the usd interest declined, the one who is paying usd got a loss, is there a netting mechanism?
You got euro, this means you borrowed euro, hence you pay interest in euro. You gave dollar, this means you invested dollar, hence you recieve interest in dollar.