business through a U.S. exchange using U. what is a derivative market in finance.S. dollars (USD). Now the investor is exposed to exchange-rate danger while holding that stock. Exchange-rate danger the risk that the value of the euro will increase in relation to the USD. If the worth of the euro rises, any profits the financier realizes upon selling the stock end up being less important when they are transformed into euros.Derivatives that could be used to hedge this sort of danger include currency futures and currency swaps. A speculator who anticipates the euro to appreciate compared to the dollar could profit by utilizing a derivative that rises in worth with the euro. When using derivatives to speculate on the cost motion of an underlying asset, the investor does not require to have a holding or portfolio existence in the hidden asset.