Businesses use foreign exchange services in various ways, including:
1. Spot Transactions: These involve the immediate exchange of currencies at the current market rate. 2. Forward Contracts: These contracts allow businesses to lock in an exchange rate for a future date, providing protection against currency volatility. 3. Currency Swaps: These involve exchanging principal and interest payments in one currency for equivalent amounts in another currency. 4. Options: These give businesses the right, but not the obligation, to exchange currency at a predetermined rate on or before a specific date.