Final answer:
The statement is false. In interest rate swaps, principal is not exchanged, only interest payments are. In currency swaps, the principal amounts are actually exchanged in the different currencies involved.
Step-by-step explanation:
The statement that principal is exchanged in interest rate swaps but not in currency swaps is false. In interest rate swaps, two parties exchange cash flows based on different interest rates applied to a notional principal amount, however, the principal itself is not actually exchanged.
Conversely, in a currency swap, the principal amounts are indeed exchanged both at the beginning and at the end of the agreement. This exchange happens because the principal amounts are in different currencies, and each party needs the respective currency to service its obligations.