18. Derivatives The Group enters into derivative financial instruments (“derivatives”), including foreign currency forward contracts, currency swaps and  currency options, or interest rate swaps, to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign  currencies or to hedge interest rate fluctuation risk. The Group also enters into derivatives, including commodity swap transactions to hedge raw material price fluctuation risk. It is the Company’s policy to use derivatives only for the purpose of reducing risks associated with fluctuations in currency exchange  rates, interest rates and raw material prices and to reduce the cost of raising funds. The Group does not engage in derivative transactions  for speculation purposes. Derivatives are subject to market risk, which is the exposure created by potential fluctuations in market conditions, including interest or  foreign exchange rates. Because the counterparties to those derivatives are limited to major international financial institutions, the Company  does not anticipate any losses arising from credit risk. Interest rate swap contracts, which are related to working assets or loans payable, are used to manage the risk of loss stemming from  interest rate fluctuations that may affect the Group’s overall asset and liability structure. In addition, the Group uses interest rate swap con- tracts to reduce the cost of raising funds. As noted in Note 17, the Group applied ASBJ Statement No. 10, “Accounting Standard for Financial Instruments,” and ASBJ Guidance  No. 19, “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” The accounting standard and the guidance  are applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010; therefore, the  required information is disclosed only for 2010. Commodity swap transactions are used to manage the risks associated with the fluctuation of raw material prices occurring within the  scope of the Group’s ordinary procurement of raw materials. Execution and control of derivative transactions are carried out by the accounting and purchasing divisions of the relevant company.  However, material transactions are executed on approval of the Board of Directors of each company, based on rules set forth by its board.  The scope of execution authority and execution amount is based on each company’s administrative rules. The result of these transactions is  reported each month to the directors of the Company as well. JS Group Corporation Annual Report 2010 78 Note: Depending on the interest rate, fixed interest rate is exchanged for floating rate. The fair value of derivative transactions is measured at the quoted price obtained from the financial institution. Millions of Yen Thousands of  U.S. Dollars Millions of Yen Thousands of  U.S. Dollars Millions of Yen March 31, 2010 Contract Amount Contract Amount Due after One Year Fair Value Unrealized Gain (Loss) Currency swap (denominated in U.S. dollar) ¥ 610 ¥ 130 ¥ (78) ¥ (78) Interest rate swaps— Fixed interest rate with conditions (see Note) 12,500 12,500 (61) (61) Interest rate and currency swap  agreement $ 16,250 $16,250 15 15 Commodity swap—  Copper swap (denominated in yen) 344 118 212 212 Thousands of U.S. Dollars Contract Amount Contract Amount  Due after  One Year Fair Value Unrealized Gain (Loss) Currency swap (denominated in U.S. dollar) $ 6,556 $ 1,397 $ (837) $ (837) Interest rate swaps— Fixed interest rate with conditions (see Note) 134,351 134,351 (655) (655) Interest rate and currency swap agreement 16,250 16,250 166 166 Commodity swap—  Copper swap (denominated in yen) 3,701 1,265 2,275 2,275 Derivative Transactions to Which Hedge Accounting Is Not Applied at March 31, 2010