Currency futures are ETCs that specify the price at which one currency can be bought or sold in another currency at a later date. These contracts speculate on currency price fluctuations. They help to mitigate currency risks such as exchange rate fluctuations.

Currency Futures Contracts are available in four currency pairs in India. These are the Indian Rupee and the United States Dollar, the Indian Rupee and the Pound Sterling, the Indian Rupee and the Euro, and the Indian Rupee and the Japanese Yen.

Forward contracts: On the other end of the spectrum, the Forward Contract is similar to Future Contracts but is traded over the counter. Forward contracts, unlike futures contracts, are not structured, and buyers and sellers are free to customise the contract's terms and settlement process without involving any intermediary.

Because these contracts are between private parties, there is always the possibility that one of the parties will fail to meet their contractual obligations. This is known as counterparty risk. To reduce risk, the party in the Forward Contract agrees to enter into a performance bond, which is typically provided by a third party. A bond of this type ensures full payment even if one of the parties fails to meet contractual obligations.