Forex Hedging Products Summary
Hedging enables you to manage risk and reduce potential risk. If you don't hedge, it's tantamount to speculating that the foreign currency rate will always stay the same, a costly assumption if the rate ends up moving unfavorably. A good hedging strategy can help eliminate currency exposure and the attendant risk associated with currency movement.
There are a number of products for hedging forex risk, which involve buying foreign currency now at known exchange rates (so you know what your costs are and have a sound basis on which to set the price of your product/service), or gaining the right to buy or sell foreign currency at a later date but at a fixed exchange rate.
Hedging products include:
1.Currency Forward Contracts
2.Futures Contract
3.Currency Options
4.Carry Spot Trade
5.Exotics and Other Alternatives
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