The difference between insured and insured is different in nature. One is not to profit from foreign exchange risks, and the other is to be responsible for compensation for lost items. Insured price is an additional postal service, which is used to deliver more valuable articles, securities, parcels, etc. If it is lost, the post and telecommunications department will be responsible for compensation according to the insured amount.

Hedging refers to the behavior of foreign exchange traders to avoid or eliminate the risk of exchange rate changes through spot foreign exchange transactions and forward foreign exchange transactions. Hedging is only to eliminate or avoid foreign exchange risks and minimize the losses caused by foreign exchange risks, not to profit from foreign exchange risks.

Hedging situation

In international trade, hard currency export and soft currency import are well-known principles. If both sides adhere to this principle, it is often impossible to realize it.

Exports sometimes have to be traded in soft currency, and imports sometimes have to be traded in hard currency. This has exchange rate risk. To this end, importers and exporters can adopt the methods of price increase and price reduction.

Value-added hedging is mainly used in export transactions, that is, when exporters accept the pricing of soft currency transactions, they will include the expected losses in the price of export commodities to pass on the risk of exchange rate changes.