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Leads and lags refer to the timing difference between the date of a foreign exchange transaction and the date when the payment is made. A lead occurs when a payment is made in advance of the due date, while a lag occurs when a payment is delayed beyond the due date.

Leading indicators are proactive measures that identify potential risks & prevent incidents. Eg, near-miss reporting, safety training completion rates, & audits. Lagging indicators are reactive measures that provide information on past incidents.

The two primary methods of hedging are through a forward contract or a currency option. Forward exchange contracts. A forward exchange contract is an agreement under which a business agrees to buy or sell a certain amount of foreign currency on a specific future date. ... Currency options.

Use hedging instruments Hedging instruments are contracts or agreements that allow you to lock in a certain exchange rate for a future transaction or period. For example, you can use a forward contract, a futures contract, an option, or a swap to hedge your currency risk.

Leading and lagging ? timing payments in foreign currencies to try and take advantage of currency movements. Leading is paying in advance, and lagging is paying later, sometimes after the due date.

There are three main types of foreign exchange risk, also known as foreign exchange exposure: transaction risk, translation risk, and economic risk.

Importer delays settlement beyond the date customary in the trade this would be called a 'lag '; if he pays earlier than normal this would be called a 'lead '. Similarly, if an exporter obtains the proceeds of his exports earlier than normal this is described as a , lead', and there is a 'lag' if settlement is delayed.

Locked-In Rates: With Locked-In exchange rates, the value of a nation's currency is fixed against the value of another single currency. The government or the central bank sets this exchange rate in order to maintain the official currency value within a narrow band and keep interest rates down.