Since forward contracts are easy to use for hedging, any exposure to exchange rate movements should be hedged.

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Quizplus · Accepted Answer

While forward contracts are a common tool for hedging against exchange rate risk, it may not always be necessary or cost-effective to hedge all exposure. Factors such as the size of the exposure, the volatility of the currency pair, and the cost of hedging instruments should be taken into account. It ultimately depends on the company's risk management strategy and appetite.

Since Forward Contracts Are Easy to Use for Hedging, Any