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Currency derivative contract

A derivative whose value is based on the performance of a market exchange rate.

(1) These derivatives are largely used as foreign exchange risk hedging instruments. (2) The most common currency derivatives are forward exchange contracts, currency futures, foreign currency options, foreign exchange swaps and cross-currency swaps. (3) Other terms, such as exchange rate derivative, foreign currency derivative, foreign exchange derivative, forex derivative and FX derivative, are sometimes used to designate a currency derivative.