What is Currency Swap?

Legal Definition
A currency swap (or a cross currency swap) is a foreign exchange derivative between two institutions to exchange the principal and/or interest payments of a loan in one currency for equivalent amounts, in net present value terms, in another currency. Currency swaps are motivated by comparative advantage. A currency swap should be distinguished from interest rate swap, for in currency swap, both principal and interest of loan is exchanged from one party to another party for mutual benefits.

Currency swaps are over-the-counter (OTC) derivatives.
-- Wikipedia
Legal Definition
An OVERTHECOUNTER SWAP involving the exchange of two currencies. A typical currency swap involves the exchange of a fixed payment in one currency for a floating payment in a second currency, although the exchange of two fixed or two floating payments can also be arranged. Currency swaps involve the initial and final exchange of principal, which results in a high degree of CREDIT RISK. Also known as CROSS CURRENCY SWAP. See also CURRENCY DERIVATIVE.