The foreign exchange market is an electronically linked network of banks, foreign exchange brokers and dealers who facilitate trading by converting one currency to another currency. Most currency transactions are channeled through the worldwide interbank market, this is a wholesale market where major banks trade with one another. This market often referred to as the foreign exchange market makes it easier for importers and exporters to convert their money to their home currency. Currencies can be traded for immediate delivery in the spot market or future delivery in the forward market. The forward market offers contracts to buy or sell currencies for future delivery dates, attracting mostly arbitrageurs, traders, hedgers and speculators. Since countries have different interest rates, arbitrageurs try to use this difference to their advantage by transferring funds from one country to another seeking to earn a risk-free profit. Traders are importers or exporters of goods, but sometimes the goods are lost or they do not receive payment. In order to cover the risk of loss of foreign currency traders use forward contracts. Forward contracts are used by hedgers in order to protect their home currency value. Hedgers are usually multinational companies who have assets and liabilities on their balance sheets they need to protect because they are denominated in foreign currency.   Shapiro, A. C., & Sarin, A. (2009). Foundations of Multinational Financial Managemetn . John Wiley & Sons, Inc. .