Foreign exchange derivative contracts require future settlement and exclude Nepal and Bhutan currencies while defining hedging exposures.

Foreign exchange derivative contracts derive value from specified currency or foreign-currency interest-rate movements and must settle after the spot settlement date; contracts involving Nepal or Bhutan currencies are excluded. Contracted and anticipated exposures identify currency risk arising from permissible current-account and capital-account transactions already entered into or proposed. Currency risk includes exchange-rate and foreign-currency interest-rate movements, while hedging means undertaking a foreign exchange derivative transaction to manage that risk. Exchange traded currency derivatives are standardised contracts traded on a recognised stock exchange for future currency purchase or sale at a contract-date price.

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