Hedging is generally carried out by import and export enterprises, involving every industry.

For example, fluctuations in exchange rates can cause fluctuations in the profits of these import and export companies.

When the exchange rate appreciates, the profits of the export enterprise will suffer huge losses because of the appreciation of the exchange rate.

Therefore, export companies will go long in the foreign exchange market to offset the impact of exchange rate fluctuations.

For example, an exporter expects sales of $4 billion in the quarter, so in order to offset the possible losses caused by exchange rate fluctuations and lock in profits, it chooses to go long on contracts worth $4 billion in the foreign exchange market.

No matter how the exchange rate moves, the profits of this company will not change.

In the same way, importers are shorting contracts of equal value in the foreign exchange market.

There are many types of hedging, and there is also hedging of commodity futures.

For example, when international crude oil is $100 per barrel, the oil company is profitable, but when the international crude oil is $90 per barrel, the company is losing money, so when the oil price trend is uncertain, if the oil price is worried about the sharp drop in oil prices, it will short international crude oil and hedge at $100 per barrel. Lock in your own profits.

There are both immediate and long-term hedging.

Some international leasing companies, although they have hedged in the foreign exchange market, will also suffer heavy losses and go bankrupt due to the soaring interbank lending rate.

For example, an international leasing company borrowed $1 billion from a domestic bank with a very low interest rate, and then invested the $1 billion in other countries to invest, the investment cycle is long, so it must be hedged in the foreign exchange market, but when the interbank lending interest suddenly skyrockets, then the international leasing company may go bankrupt and not pay the interest. , ignoring the interbank lending rate. For example, when the protagonist holds millions of lots, the swap may be millions of dollars per day.

That's millions of dollars in interest every day. There are positive and negative, the key depends on the currency holdings. This multi-million dollar can be positive or negative.

For example, USD/JPY, USD/CAD are all positive interest, and the protagonist earns millions of dollars per day.

Ignoring it, the swap is very small compared to the profit that fluctuates by one point.

Another day, I will open a single chapter to talk about this thing specifically, and the business war plot will be written later.

When the protagonist wants to buy a multinational company, he often has to make a fuss about the interbank interest rate.

Many multinational companies have lost a lot of money because they know this.