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methods of hedging

This topic has 1 reply, 2 voices, and was last updated 10 months ago by John Moffat.

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August 28, 2021 at 2:18 pm #633267
AshleyMarc1997
- Topics: 48
- Replies: 24
I have two questions relating to methods of hedging the transaction risk.

[Question 1]
They all are used for Short-term hedging techniques:
Forward Contracts; Money Market Hedge; Currency Futures; Currency Options

It is a Long-term hedging technique:
Currency Swaps

[Question 2]
They all are used for hedging big amounts of foreign currency:
Forward Contracts; Money Market Hedge; Currency Futures; Currency Swaps

While these are used for hedging lower amounts of foreign currency:
Currency Options

Am I correct?
August 28, 2021 at 3:40 pm #633274
John Moffat
Keymaster
- Topics: 57
- Replies: 49628
You are correct for question 1.

For question 2, forward rates can be used for small amounts, the others are for larger amounts.
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