The hedging of foreign-exchange risk as method to reduce the uncertainty

Abstract

The article discusses hedging as a way to manage foreign-exchange risks. The essence of currency risk is revealed; identified factors affecting its change; and also considered the concept of "currency prices" and "currency of payment". The application of hedging was analyzed using the main types of derivatives (forwards, futures and options). Negative and positive aspects of reducing foreign-exchange risk with hedging are identified.