Which of the following is a commonly used financial instrument for hedging foreign exchange risk?

Q. Which of the following is a commonly used financial instrument for hedging foreign exchange risk?
Answer: Forward Contracts
Notes: A forward contract is a financial instrument commonly used by businesses and investors to hedge against currency risk by locking in an exchange rate for a future transaction.

Question Source: 📚This question is part of Banking Awareness - 2025-26 course in GKToday's Android Application. The Course comprises 2400+MCQs on Banking & General Financial Awareness with explanation for All Banking Exams of 2025-26 such as IBPS Bank PO, IBPS Bank Clerical, RRB PO and Clerical, SBI PO and SBI Clerical, IBPS Recruitments, RBI Grade B and RBI Banking Examinations. Download the app here.

📌 Question Number: 2 in Forex Services – Forex Trading, Currency Exchange, Hedging and Risk Management in the above course in App.