Abstract: This paper examined the impact of foreign currency derivatives on firm value using several findings from firms across the world with significant exchange rate exposure. The results show that foreign currency derivatives usage affect firm value positively. The study also revealed that foreign currency derivatives can be used for managers’ self-interest, for hedging or for speculative purposes. Furthermore, the study found strong evidence that the use of foreign currency derivatives for firms that have strong internal firm-level or external country-level corporate governance is associated with a significant value premium. The paper therefore emphasizes that investors can appeal to a firm’s internal (firm-level) and external (country-level) corporate governance to draw inferences on a firm’s motive behind the use of derivatives, since well-governed firms are more likely to use derivatives to hedge rather than to speculate or pursue managers’ self-interest.