Written by Tony Crivelli
Updated over a week ago

A hedge is a product that is used to reduce currency exposure risk. While it reduces exposure risk, it will often increase the risk the business will incur an opportunity cost.

This is because while the products will provide certainty of the worst case rate that will be achieved, they will generally also come with an obligation to trade at a rate that may be unfavourable on expiry.

Currency hedge products are forward and option contracts.

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