Institutional traders represent corporations or hedge funds trading directly on the interbank or through retail currency dealers. Hedge funds may participate as speculators while corporations participate to protect their interests against exchange risk. Corporations conducting business globally face a potential issue of fast-moving exchange rates, devaluing their profits made overseas. These corporations may participate in the currency market by hedging their risk directly in the currency market rather than waiting for a bank to exchange the currency for them. Most institutional traders representing corporations are involved in some kind of hedge to protect the value of their goods or services from exchange-related risks. Institutional traders may include professional money managers looking to diversify and hedge against the risk of loss in the equities market.
