Foreign exchange rate risk in general is related to unexpected changes in foreign exchange rates. The importance of managing foreign exchange risk has increased with a global economic and financial integration, and the associated increase in global trade, liberalization of financial markets, and dismantling of capital controls. There are no exchange-traded currency derivatives in India. In terms of the growth of derivatives markets, and the variety of derivatives users, the Indian market has equaled or exceeded many other regional markets. While the growth is being spearheaded mainly by private sector institutions and large corporations, smaller companies and state-owned institutions are gradually getting into the act.