Hedging
Also called: currency hedging, hedge
Taking an offsetting position, such as a forward contract, to reduce the effect of a price or currency move on future payments or receipts.
Companies hedge foreign currency revenues, costs and debts to make results more predictable. Hedging costs money, delays and softens the effect of moves, and does not remove the effect of a lasting change.
Learn more in these lessons
- Currency movements and the rupeeWhat moves the rupee, and which companies win or lose when it changes?
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- What derivatives areWhat is a derivative, and who wins and loses when people trade them?
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