Understanding FX Futures White Paper

Businesses Exposed to Exchange Rate Gyrations

A number of factors have coalesced in the early 21st century to promote free trade across distance and political boundaries, meaning today's corporation frequently conducts business outside its native country and earns revenues or incurs liabilities denominated in currencies apart from its native currency.

"In the process, these corporations may become exposed to the risk that foreign exchange rates are unpredictable and can fluctuate in adverse directions," according to a CME Group white paper, "Understanding FX Futures," written by CME directors John Labuszewski, Sandra Ro and David Gibbs.

"These uncertainties may make it difficult to manage current cash flows, plan future business expansion or to succeed in a competitive market environment," the analysts wrote.

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