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What is the currency protection clause?
Currency hedging clause is a protective clause in international trade and international credit contracts, which is concluded by both parties to avoid possible economic losses caused by exchange rate changes of settlement currency during the contract period. Currency hedging clause can be referred to as "currency clause" or "hedging clause" for short.

The usual way to preserve the value of monetary terms is to link the settlement currency with a relatively stable currency or price index, and adjust the amount of settlement payment accordingly according to the change of its exchange rate or price. Currency hedging clauses can be divided into gold hedging clauses, foreign exchange hedging clauses and price index hedging clauses according to different objects.

Because the currency hedging clause uses an index, it is called currency indexation. There are two main forms of index, namely simple index form and compound index form.