Role of Currency Futures in Risk Management

Seminar paper from the year 2011 in the subject Business economics - Banking Stock Exchanges Insurance Accounting grade: 81% University of Westminster (Westminster Business School) language: English abstract: This paper examines the role of currency futures contracts in risk management. The reader can find a brief introduction to the history of foreign exchange markets and under which cir-cumstances the markets appeared in 1970s. Furthermore the question of why to use currency futures to hedge risk exposures is answered. A more in-depth analysis of how currency futures contracts are structured especially their specifications and their advantages and limi-tations for the user. Moreover this paper addresses issue of how currency futures are used by participants. Finally a brief use of currency futures is also examined with a case study on the FX-market.