Organisation imports and exports to and from several countries and from there the currency risk arises. If the Company needs to pay money in future for the Goods purchased or services rendered from a foreign country, then there is a strong chance that exchange rate between two currencies will fluctuate causing a loss or profit to the company.

In order to avoid the currency risk or forex risk, Company may use hedging methods. The most common hedging methods are Forwards, futures, options and currency swaps.

We will discuss these in another article.