I keep getting questions wrong that deal with import and export, what ...

The value of one currency relative to another constantly fluctuates. The U.S. dollar is the benchmark against which the value of all other currencies is measured. During any given point, one U.S. dollar may buy more or less  of another country’s currency. Businesses engaged in international trade can hedge their currency risks through the use of foreign currency futures.

Foreign currency futures may also be used by investors to speculate on the direction of a currency’s value relative to the U.S. dollar. As the value of another country’s currency rises, the value of the U.S. dollar falls. As a result, it would now take more U.S. dollars to purchase one unit of that foreign currency. Conversely, if the value of the foreign currency falls, the value of the U.S. dollar will rise, and it would now take fewer U.S. dollars to dollars to purchase one unit of the foreign currency. The values of foreign currencies are inversely related to each other. Foreign currency futures trade on the Chicago Mercantile Exchange. The exchange sets the amount of the foreign currency covered under each contract and the delivery month. Foreign currency futures settle in the exchange or delivery of the currencies. Businesses and investors will trade foreign currency futures for very different reasons. A business will trade foreign currency futures to manage its foreign currency risk. An importer will purchase foreign currency futures for the currency of the country where it purchases products to reduce the risk of that country’s currency rising in value in relation to the U.S. dollar. If the country’s currency becomes stronger, it will take more U.S. dollars to purchase the same amount of the foreign currency. As a result, the cost to the importer will rise. Alternatively, in the case of an exporter a fall in the value of a foreign currency relative to the dollar would cause the exporter to realize a lower sales price for their products once the payment in the foreign currency is converted into U.S. dollars. As a result, the exporter, to manage foreign currency risk, will sell futures on the foreign currency.