Series 7 - General Securities Representative Exam
A Canadian exporter of oil is selling oil to the United States and will receive payment in US dollars. How can the exporter best hedge against a falling US Dollar versus the Canadian Dollar?
By purchasing calls on the Canadian dollar, the exporter will hedge their risk of the US Dollar losing value against their home currency. This way, if the Canadian dollar rises and the US dollar falls, there will be no negative impact to the Canadian based company. There are no options that trade on the US dollar only. The Dollar Index DXY measures the dollar against a basket of other world currencies