Question

What are the hedging products offered by banks used by corporates to hedge their foreign exchange risk. Explain each product with example?

Answer 1

Explanation:

Examples of hedging include:

Forward exchange contract for currencies.

Currency future contracts.

Money Market Operations for currencies.

Forward Exchange Contract for interest.

Money Market Operations for interest.

Future contracts for interest.

Covered Calls on equities.

Short Straddles on equities or indexes.