Currency hedging uses financial or operational techniques to reduce uncertainty from future exchange-rate movements. A business might match foreign-currency receipts and payments, use a forward contract, or set an internal policy. Hedging availability, cost, and suitability depend on the business and provider.
Quick reference for Currency hedging
| Check | What it means for the transaction |
|---|---|
| Category | Global B2B payment operations |
| Record to keep | Keep the instruction, party and account identifiers, validation result, timestamps, institution references and reconciliation outcome. |
| Do not infer | Initiation, processing, clearing and settlement are different events. One status should not be used as proof of another. |
Currency hedging and nearby terms
- FX exposure: FX exposure is the potential financial effect of exchange-rate movements on amounts a business expects to pay, receive, own, or owe in another currency.
- Forward exchange contract: A forward exchange contract is an agreement to exchange currencies at a set rate on a future date or during an agreed period.
