S/F/48. Organisations should not hedge foreign currency risk. Discuss

With respect to financial derivatives, a hedge is a position taken with the intention of obtaining protection from adverse price changes in an underlying asset. There are many forms of hedging that a company may wish to pursue, by using financial derivatives as well as other practices. There is a range of ways to hedge foreign currency risk using derivative functions including futures, options and swaps, or even options on futures. This paper analyses whether hedging is an appropriate measure for organisations to take.