Eurodollar Futures
Eurodollar futures are financial contracts used to predict future interest rates on deposits held in U.S. dollars outside the United States. They are traded on exchanges, providing a way for investors to hedge against interest rate changes or speculate on future movements. The value of these contracts moves inversely with interest rates: as rates rise, futures prices fall, and vice versa. Investors in Eurodollar futures include banks, corporations, and hedge funds who aim to manage their interest rate exposure in a global dollar market.
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Eurodollar futures are financial contracts that allow investors to bet on or hedge against future interest rates for U.S. dollars deposited in foreign banks. Essentially, they provide a way to lock in borrowing costs or profit from changes in interest rates. These contracts are based on the expected interest rate for a deposit held for three months in a Eurodollar account. Since they reflect market expectations of future interest rates, they play a significant role in financial markets, helping businesses and investors manage interest rate risks effectively.