Hedge Ratio - Currency Futures

CFA Level III Derivatives
#1

Per CFAI: “[If] the hedge ratio is assumed to equal 1, the changes in futures and spot prices will be equal during the life of the futures contract, and so the hedge will be fully effective.”

The hedge ratio for futures can be calculated as:

HR = amount of currency to be exchanged / futures contract size

How does this make any sense? Why can I not have hedge ratio of any number and perfectly hedge? So lost, please help

#2

I think it’s because the optimal hedge ratio has to consider the relationship between the hedged item and the hedging instrument.

This should determine the number of futures to buy. You can also choose to achieve a less than optimal hedge (to allow for some exposure to the risk), so you can work back to determine the number of hedging instruments to purchase.