FOREX Swaps versus Currency Swaps

A currency swap is where both companies borrow in their own currency and then swap, so that each ends up paying interest in the other currency. The main reason for doing this is because each company wants to borrow in the other currency (because, for example, they are going to invest in a project in the other company) but borrowing yourself in another currency is likely to cost more in interest. So swapping means they same interest.

A FOREX swap is more short-term and is when you have deposits on one currency but would like to switch them temporarily into another currency (and then switch back later) because you are worried as to how the exchange rate might change.