For questions where we are converting foreign cash receipts into domestic currency using a swap, why do we not exchange (swap) principal at the beginning? These questions appear similar to those in a currency swap, and in currency swaps we exchange principal amounts and then return them at maturity.
My take: Swaps can be used to convert a foreign loan into a domestic loan, or foreign cash receipt into domestic receipt etc. In the case of converting loan, the foreign currency exposure is on the loan and loan interest hence you need to exchange the loan. In the case of a series of foreign receipts, these are more like interest payments and hence you are only exposed to these and not the principal amount and hence no need to exchange the notional principle. For example if you are a US investor and you are expecting GBP quarterly payments of 600,000 for 1 year and British interest rates are 6%. The notional principle is £10m. Your foreign currency risk is only on the quarterly £600k and therefore no need to take exposure by swaping the £10m.