In order to obtain higher interest on foreign exchange deposits, the company converted 6,543,800 euros into US dollars and deposited them in the bank. When deposited in the bank, the exchange rate is 654.38+0 USD = 654.38+0 Euro. The company is worried that the US dollar will depreciate in three months (for example, 654.38+0 USD =0.8 EUR), and it will lose money to change the US dollar deposit from the bank into euros.

At this time, the company can choose to sell the same amount of dollars in the futures market, open short positions and hedge. For example, according to the daily exchange rate of deposits, it sold $6,543,800+in the forward market. If the dollar really depreciates after 3 months, the company will lose money by selling dollars and buying euros in the spot market, but it can make a profit by buying short positions in the futures market held before liquidation, and use this profit to offset the above losses. In this way, the role of hedging is realized.

PS: The above exchange rate is an example, which is not equal to today's exchange rate.