When a domestic importer desires to hedge a foreign currency payable using an FX forward, the importer will contract to sell a specified number of foreign currency units.

Question

Quizplus · Accepted Answer

In hedging a foreign currency payable, the domestic importer will contract to buy a specified number of foreign currency units at a future date, not sell them, to ensure they can meet their future payment obligations at a known rate.

When a Domestic Importer Desires to Hedge a Foreign Currency