[Reehad]

Thx for your response

[Reehad]

Why do the currency contract differs? is it an option available in real life? for example if im in the uk and im receiving Euros , i can choose to hedge with Euro or £ future contracts? ( obviously in exams they will give only one)

Uk company receiving euros, contract in £, we are selling Euros , so we are buying £ and thus we buy £ contracts.

Now if the contract was in Euro?, we sell Euro contracts?

[Reehad]

This is the only thing i understood i.e if you have to make a payment
in Euro and your domestic currency is £ and IF euro appreciates against £ you will end up using more £ to buy Euros. So you Buy Euro futures now which is cheaper and sell them later.

Now if you have a receipt in Euro and if euro depreciates you will end up with less £ upon conversion, so you sell Euro contracts now and buy cheaper later.

.

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