What’s the difference between FX hedging and forward contracts?
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FX hedging is the broader term that means protecting your business from exchange rate fluctuations. One of the most common ways to do that is by using a forward contract—which is just a tool that lets you lock in today’s exchange rate for a payment you plan to make in the future.
While the terms are often used interchangeably, a forward contract is the actual product used to execute FX hedging.