Provide an Example of a Corporate Exposure Hedged by a Currency Forward ▴ Learn

Provide an Example of a Corporate Exposure Hedged by a Currency Forward.

Consider a US-based technology company that expects to receive a payment of 1 million Euros in three months for a software sale to a European client. The company is exposed to the risk that the Euro's value will drop against the US Dollar before the payment is received.

To hedge this, the company enters a currency forward contract to sell 1 million Euros at a specific US Dollar exchange rate in three months. This locks in the future USD revenue, eliminating the currency fluctuation risk.

What Is the Current Transaction Threshold for the FATF Travel Rule?

How Does Depreciation of Mining Hardware Impact the Long-Term Break-Even Analysis?

Why Is Hardware Depreciation a Significant Factor in Calculating Mining Profitability?

What Is the Difference between an IPO and a Security Token Offering (STO)?