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Chapter 8 Currency Swaps and Swaps Markets True/False 1. A currency swap is an agreement to exchange a principal amount of two different currencies and, after a pre-arranged length of time, to re-exchange the original principal. ANS: True. 2. Interest payments are typically exchanged during the life of a swap agreement. ANS: True. 3. Currency swaps are usually used to hedge short-term currency risks. ANS: False. Swaps usually involve long-term exposures to financial price risks. 4. An interest rate swap is a currency swap in which the principal amounts are in a single currency