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Currency futures are futures contracts for currencies that specify the price of exchanging one currency for another at a future date. The rate for currency futures contracts is derived from spot rates of the currency pair.

Record a forward contract on the contract date on the balance sheet from the seller's perspective. On the liability side of the equation, you would credit the Asset Obligation for the spot rate. Then, on the asset side of the equation, you would debit the Asset Receivable for the forward rate.

These off-balance-sheet items are quite diverse in nature and purpose and may include such instruments as firm loan commit- ments, standby letters of credit, foreign exchange, financial futures, forward contracts, options, interest rate swap contracts, and other derivative products.

If a contract between parties from different countries refers to a currency that uses the dollar sign, using a currency code or a suitably modified currency sign, such as A$ for Australian dollars and Mex$ for Mexican pesos, would make it clear which currency is being referred to.

The exporter in France and the importer in the US agree upon an exchange rate of 1.30 US dollars for 1 euro that will govern the transaction that is to take place six months from the date the currency forward contract is made between them.

Since the forward contract refers to the underlying asset that will be delivered on the specified date, it is considered a type of derivative. Forward contracts can be used to lock in a specific price to avoid volatility in pricing.

A forward contract is a type of derivative. A derivative is an investment contract between two or more parties whose value is tied to an underlying asset or set of assets. For example, commodities, foreign currencies, market indexes and individual stocks can all be underlying assets for derivatives.