The Use of Currency Futures

The Use of Currency Futures

The currency futures market is also used by some companies for hedging. These companies either purchase currency futures for their future payables, or sell the futures on currencies for their future receipts. Speculators may also buy or sell futures on a foreign currency as a protection against the strengthening or weakening of the US dollar. So, speculators may be able to earn profit from the rise or fall of these exchange rates.

Risks of Currency Futures

Currency futures or forex trading are fraught with high levels of risk. A small unfavorable fluctuation in the exchange rate may result in loss of an investor’s entire deposit. Investors are advised to enter into this field only if they have in-depth knowledge of how risky this segment of financial market really is...