What Is The Difference Between a Currency Swap and an Interest Rate Swap?

A currency swap is similar, in concept, to an interest rate swap, but they differ quite remarkably in specific aspects. First, the exchanged cash flows in the former are in different currencies (that means, pricing a currency swap would require two different yield curves instead of one). Second, a currency swap involves the exchange of notional principal amounts at the trade date and the re-exchange at maturity, whilst in an interest rate swap the notional amounts are denominated in the same currency. Third, in a currency swap, a floating rate is typically exchanged against another floating rate (still there are fixed-fixed currency swaps). On the contrary, an interest rate swap entails the exchange of any pair of legs (floating-floating, fixed-floating, and fixed-fixed). Notwithstanding, both swaps can be valued using the same techniques.