Hedging

Open credit
Open credit allows the importer access to the goods with a promise to repay at a later date. This method of payment exposes the exporter to the greatest amount of risk, as the exporter is totally reliant on the importer’s ability to pay.


Hedging
When two parties agree to exchange currency and finalise a deal immediately the transaction is referred to as a spot exchange.
The spot exchange rate is the value of one currency in another currency on a particular day.
Therefore, when an Australian tourist in Tokyo goes t...