Editing Currency future (section)

===Hedging===
Investors use these futures contracts to [[Hedge (finance)|hedge]] against foreign exchange risk. If an investor will receive cash denominated in a foreign currency on some future date, the current exchange rate can be locked in by entering into an offsetting currency futures position that expires on the date the cash is due, used only if the rate worsens.

For example, Jane is a US-based investor who will receive €1,000,000 on December 1; the current exchange rate is {{val|p=$|1.2|u=/€}}. She can insure against the rate worsening by locking in this exchange rate, buying €1,000,000 worth of futures contracts guaranteeing an exchange rate of {{val|p=$|1.2|u=/€}} on December 1 regardless of  fluctuations. If the exchange rate does not worsen, the contract is abandoned and its cost lost, the price of insurance.