The Use Forex Trading as Hedging of Currency Risks

Companies engaged in foreign trade transactions worldwide are active participants in international Forex market. For exporters, there is a constant need to sell foreign currency, while for importers the constant need to buy it. Currency exchange rates in the international currency market are constantly changing. As a result, the real value for the goods or services can significantly change and a profitable contract may not be as profitable or unprofitable based on changing exchange rates. Of course, the reverse situation can occur; when a changing exchange rate causes more of a profit. Nonetheless, the task of a trading company is not to lose or profit from these varying exchange rates.