Currency & FX
Exchange rates, hedging, and protecting your margins.
27 articles
What Is an Exchange Rate?
An exchange rate tells you how much of one currency you get for another. Fluctuations can dramatically affect your costs and revenue.
What Is FX Risk?
FX risk is the chance that exchange rate movements will hurt your business. Here's how to identify it and manage it.
What Is Currency Hedging?
Currency hedging reduces your exposure to exchange rate movements. Here's when it's worth doing — and when it isn't.
What Is the Mid-Market Rate?
The mid-market rate is the 'true' exchange rate between currencies. Understanding it helps you identify how much you're paying in currency conversion fees.
What Is Currency Volatility?
Currency volatility measures how much an exchange rate fluctuates. High volatility means higher FX risk for your business.
What Is a Currency Pair?
A currency pair expresses the price of one currency in terms of another. Understanding pairs is the foundation of all FX trading and business currency management.
What Is FX Exposure?
FX exposure is the total amount of your business activity that is subject to exchange rate risk. Quantifying it is the first step to managing it.
What Is Transaction Exposure?
Transaction exposure is the FX risk on a specific, already-agreed trade. It's the most immediate form of currency risk for trading businesses.
What Is Natural Hedging?
Natural hedging reduces FX risk by matching revenues and costs in the same currency. The simplest and cheapest form of currency risk management.
What Is a Currency Option?
A currency option gives you the right, but not the obligation, to exchange currency at a set rate. Flexible but costs a premium.
What Is a Multi-Currency Account?
A multi-currency account holds and pays in multiple currencies without forced conversion. Essential for international businesses.
What Is a Pegged Currency?
A currency peg fixes the exchange rate to another currency or basket. Learn how pegs work and when they break.
What Is the Carry Trade in FX?
The carry trade borrows in a low-interest currency to invest in a high-interest currency. Learn why it matters for exchange rate movements.
What Is the Real Effective Exchange Rate (REER)?
The REER adjusts the exchange rate for inflation differences between countries. A better measure of competitiveness than the nominal rate.
What Is Currency Intervention?
Currency intervention occurs when a central bank buys or sells currency to influence its exchange rate. Learn how it affects businesses.
What Is a Remittance and How Does It Affect Exchange Rates?
Remittances are money transfers sent home by migrant workers. They are a major capital flow that influences currencies in many countries.
What Is a Currency Swap?
A currency swap exchanges principal and interest in one currency for another. Learn when businesses use them and how they differ from forward contracts.
What Is Forex Hedging?
Learn how forex hedging protects businesses from currency fluctuations that can erode profit margins on international transactions.
What Is a Forward Contract?
Understand how forward contracts lock in exchange rates for future transactions, providing certainty for international trade payments.
What Is Currency Risk?
Learn how currency risk affects international business profitability and the strategies available to manage exchange rate exposure.
What Is a Currency Swap?
Discover how currency swaps allow two parties to exchange principal and interest payments in different currencies over a specified period.
What Is Dollarisation?
Understand what dollarisation means, why some countries adopt foreign currencies, and how it affects businesses and monetary policy.
What Is a Currency Peg?
Learn how currency pegs fix a local currency's value to a foreign currency and why central banks maintain or abandon them.
What Is the Real Effective Exchange Rate?
Understand how the real effective exchange rate measures a currency's true trade competitiveness by adjusting for inflation across trading partners.
What Is Purchasing Power Parity?
Learn how purchasing power parity compares living costs across countries and what it reveals about currency valuation and economic size.
What Is a Spot Rate?
Understand what the spot rate is, how it is determined in foreign exchange markets, and why it matters for international transactions.
What Is a Remittance Corridor?
Discover what remittance corridors are, how they connect migrant workers with families back home, and why transfer costs vary so widely.