A currency future is a standardized contract to buy or sell a fixed amount at a fixed rate at a fixed future date.
1. if the rate as fixed, why are we worried about changes in the exchange rate?
CIMA Forums
Currency future
7y ago#1The currency is floating, but the future is at a fixed rate. Therefore instead of simply dealing in currency as you need it, and putting up with whatever exchange rate is there at the time you can make arrangements using futures to effectively fix the exchange rate.
Of course, the fixed rate might be better or worse than the actual rate at the time, but the purpose of hedging is to provide certainty, not to guarantee the best rate
Sign into reply to this topic.