Okuzeka
International Trade vocabulary · Foreign Exchange

Hedge

Meaning in international trade, with examples

/hedʒ/verbCommon term

In international trade, hedge means: To reduce the risk of losing money from future price or exchange-rate changes, for example by fixing today the rate for a payment that will arrive later.

In Turkish: riskten korunmak, hedge etmek, kuru sabitlemek

How it is used

Used by finance teams and banks: 'hedge currency risk', 'hedge our euro receivables', 'hedge with a forward contract'. The noun is also 'hedge', and the activity is called 'hedging'.

Example sentences

  1. We hedge about half of our expected dollar income for the next six months.

  2. The company had not hedged, so the fall in the euro hit its margins.

Common collocations

  • hedge currency risk
  • hedge against
  • hedge with forwards
  • hedging strategy
  • forward contractAn agreement with a bank to buy or sell a set amount of foreign currency on a future date at an exchange rate fixed today.
  • currency riskThe risk that a change in exchange rates will reduce the value of money you will receive, or raise the cost of money you will pay, in another currency.
  • exchange rateThe price of one currency expressed in another, for example how many Turkish lira you need to buy one euro.
  • spot rateThe exchange rate for buying or selling a currency for immediate delivery, which for most currencies means settlement within two business days.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Foreign Exchange

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level: