The document discusses hedging currency risk for an Indian oil refiner and importer. It describes an example where the refiner exports oil without hedging, and ends up losing Rs. 300 per barrel when the INR appreciates against the USD. By contrast, if the refiner had shorted USD/INR futures, the profit from the short position would have offset the loss from the currency movement in the physical market. Similarly, an importer risks a higher cost if the USD strengthens; but taking a long position in USD/INR futures provides a hedge against this risk.