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What is a currency future?

Updated: 9/11/2023
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Natytani

Lvl 1
6y ago

Best Answer

currency future is a future contract in which a specified currency can be bought or sell at a predetermined price and date. it can be used for risk hedging purpose and for speculation purpose.risk is related to fluctuation in rate of various currencies,e.g. rupee to dollar, if investor will receive cash flow denominated in foreign currency in some future date at that time the value of that currency might be lower than today's value then there is a risk for getting money less than it should be. so to eliminate this risk the investor will enter in to the contract of currency future that he will sell this contract at some specific price at predetermined date. hence his risk will be hedged now he is no longer concerned about the fluctuation in value of that currency.

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Safest currency for the future invstment?

A currency future, which is also narrated as FX future or foreign exchange future, is a future contract. This is the currency that is used in international market to exchange currency. All country use this main currency as their reserve and deal with other countries in this FX currency.


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The currency futures can be used by a corporation to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date. It is also called foreign exchange future or FX future.


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