What strategies can an importer adopt to hedge against exchange rate risk?

For an importer the best time to import is when the local
currency has appreciated with respect to the currency of the nation from which goods are
being imported. A stronger local currency decreases the amount that has to be spent in
terms of the local currency for importing any good at the same price  in terms of the
foreign currency.

To hedge against foreign exchange risk, a
few things that an  importer can do are the
following:

1. The importer should not rely on
   exporters from only one country to import everything. If exporters in many countries can
   offer the same product, the importer should diversify. This strategy can work out to the
   importer's advantage if the local currency depreciates with respect to the currency of
   only a few nations.


2. The importer can use the forex market
   to buy currency futures when the local currency is strong. The expiry of the contracts
   bought should be close to when the importer is actually going to import the products.
   This would ensure that the importer can import at a low cost even if the local currency
   were to depreciate in the future.