What is Currency Options? Currency options are financial derivatives that give the holder the right, but not the obligation, to exchange one currency for another at a pre-determined exchange rate…

What is Currency Swaps? A Currency Swap, also known as a forex swap or FX swap, is a financial derivative contract between two parties that involves the exchange of one…

What is Currency Future? A currency future is a derivative contract with a currency as the underlying commodity. It is a contract that gives the buyer a right and obligation…

What is Interest Rate Swap (IRS)? An Interest Rate Swap (IRS) is a financial derivative contract between two parties that involves the exchange of interest payments over a specified period…

Derivatives and Their Need in Foreign Exchange Management Corporates face different types of risks related to foreign exposure in their domestic and international operations. These risks can be related to…

What is Forward Rate Agreements (FRAs)? Forward Rate Agreements (FRAs) are derivative products used for hedging against interest rate uncertainty by banks and corporates. They are not exchange-traded derivative products…

Foreign Exchange Risk Management The concept of risk refers to uncertainty with regard to the outcome of an event. The uncertainty might imply potential future losses. Foreign exchange transactions involve…

What is Hedging? Hedging is a risk management strategy used by individuals, businesses, and investors to reduce or mitigate the potential financial losses associated with adverse price movements or uncertainties…

What is International Bonds? International bonds, also known as foreign bonds or sovereign bonds, are debt securities issued by a country's government or a corporation in that country to raise…

What is Letter of Credit (LC)? Letter of Credit (LC) is the most secured and widely used form of international trade transaction method. An LC is a commitment on behalf…