Exchange rates are very volatile.
The dollar value of an MNC’s future payables or receivables in a foreign currency can change substantially in response to exchange rate movements. The value of a firm’s transactions can change over time in response to exchange rate movements
Consider a U.S. firm whose business is to import products and sell them in the U.S. It pays 1 million euros at the beginning of each quarter. If it does not hedge, the dollar value of the payment changes in line with the value of the euro. When the euro was strong, the dollar payment would have been high, when the euro was week, the dollar payment would have been low