Forex Futures

See: Foreign Exchange. See: Futures.

Know you're going to need a boatload of New Zealand dollars for the sheep-shearing harvest next spring? You know the sheep are going to produce wool (the male ones, too). You know you'll need the currency, but you don't want to risk variations in the relative value of New Zealand dollars against U.S. dollars. So you buy currency futures, which lock in the U.S. dollar to the New Zealand dollar exchange ratio. That way, at night, when you have trouble sleeping, you can count unshorn sheep instead of naked ones.