Forex glossary
Corporations (treasury hedging)
Companies using currencies to pay for imports or handle foreign receipts, among other purposes. A company's currency purchase need not imply a forecast that the currency will rise.
Illustrative example
How does it work in practice?
A fictional importer buys 5,000 EUR before its supplier invoice falls due. The purchase meets a payment obligation; it does not necessarily express a bullish view on the euro.
A case to work through
Receivable and payable
A fictional company expects to receive 50,000 USD and pay 30,000 USD on the same date.
- Match the currency and settlement date.
- 50,000 − 30,000 leaves a 20,000 USD net inflow.
What follows? Assess that exposure before considering a hedge.
Example boundary: Different dates or uncertain receipts require separate schedules.
Matching payments
Text description of the diagram
- Receipt: Hypothetical receivable: 50,000 USD.
- Payment: Same date: payable of 30,000 USD.
- Difference: A net 20,000 USD inflow remains.
A useful distinction
Corporations (treasury hedging) / Hedge funds in forex
A corporation can meet operating payments; a hedge fund pursues an investment mandate.
Check your understanding
Calculate a simplified corporate payment exposure.
Show the answer and explanation
No, identify the trade's purpose
The same market side can serve different purposes.
FX participants, access and execution
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Related terms
Sources and documentation
- Triennial Central Bank Survey of foreign exchange and OTC derivatives markets in 2025 – BIS
Provides the earlier basis for distinguishing market participants and functions.
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.