The false statement is C.

Why?

• A currency swap usually begins with an exchange of principals, so A is true.
• Currency swaps generally have higher credit exposure than plain vanilla interest rate swaps because principal is exchanged and payments are not usually netted, so B is true.
• Interest payments in currency swaps are typically made in each currency separately, so D is true.
• Statement C is not necessarily true: even if the swap starts with zero value and zero current exposure, future interest rate and exchange rate changes can create positive expected exposure over time. Flat term structures and equal coupons do not guarantee that the expected credit exposure profile remains zero throughout the life of the swap.