Currency derivatives allow parties to hedge against risks from currency exchange rate fluctuations. In the example, an Indian tea grower agrees to supply tea to a US importer in 3 months at a fixed price of $10 per unit. However, the exchange rate could change by then. To hedge this risk, the tea grower enters a forward contract with a currency trader whereby the trader will pay the equivalent of $100 USD at the current exchange rate of Rs. 55, no matter what the rate is in 3 months. This protects the grower if the rupee falls, while the trader profits if it rises instead. Currency derivatives thus help parties mitigate foreign exchange risks over a future period.