Net exposure refers to allowing foreign exchange positions to face the risks brought by market exchange rate fluctuations, and not taking any risk coverage measures for foreign exchange positions. The purpose of net exposure hedging is to make the hedging parties realize complementary fluctuations in value. Hedging is the activity of using futures contracts as temporary substitutes for trading products in the future spot trading market, then buying and preparing a series of commodities, and then insuring these products.

Matters needing attention in hedging transaction

In order to achieve the purpose of cash hedging better and stronger, the company should pay attention to the following matters when hedging:

1. Adhere to the standards of equality and relativity: futures products must be traded on an equal footing in the spot market. Product type or related total must be the same. Relativity refers to taking opposite personal transactions in two sales markets, such as buying from the spot market first, selling in the futures market, or vice versa;

2. Choose a spot market with reasonable risk for hedging: if the price is relatively stable, this operation is not needed. In addition, hedging transactions require a certain fee;

3. Compare the net risk amount with the hedging amount: After the comparison, it is clear whether to hedge.