Commercial Corporations, unlike other market participants, are part of the 10% of market players who do not partake in the Forex markets looking for profit. Rather, they do so for the sake of hedging risk. Such corporations make transactions in both the futures and spot markets for their daily operations. They need it to pay suppliers for raw materials, as well as to pay employees from different countries.The reason why commercial companies enter into FOREX is because they want to avoid being exposed to exchange rate risks on a daily basis. By buying and selling currencies simultaneously in two different markets (futures and spot), these companies can essentially "lock-in" an exchange rate for a certain period of time - thus eliminating any potential losses that may arise if rates move against them during that time period.While some people might see commercial hedging activity as contributing to price volatility due to increased supply/demand imbalance, it is important to realize that without this type of player in the FOREX market, prices would be even more volatile than they already are!
