Fair value hedging refers to a hedge accounting concept.

A fair value hedge is a hedge of the exposure to changes in the fair value of an asset or liability, used to mitigate fluctuations and to protect the fair value of a specific asset, liability or unrecognised company commitment from risks that can affect their profit and loss accounts.

Currency forward or options can be used as fair value hedges in cases such as hedging the exchange rate of a bond issued in a foreign currency, hedging the currency component of an investment in a portfolio of foreign securities or the cost of purchase of a fixed asset at a date in the future.