FX risk management is filled with nuances affecting how some exposures are commonly hedged versus others, but there is one crucial differentiator dividing two very different approaches – that of forecastversus balance sheetexposures. This is the first delineation to be made when we characterize FX exposures.
It is said that the two happiest days in boat owners’ lives are the day they buy the boat, and the day they sell it. If you own a boat, you understand this ism based on the money and effort it costs to keep a boat. Executives feel the same fervor when their operations expand into fast growing economies with large populations…
In an earlier article, we helped you build a foundation for your FX risk management strategy with a “brick and mortar” analogy… the process of collecting exposure data and executing hedges we described as “bricks,” and risk measurement and analysis using VAR and confidence intervals were described as “mortar.” This article will discuss a crucial step in your foundation-building process: gathering accurateFX exposure data.
Sir Arthur Conan Doyle said (via Sherlock Holmes), “When you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” An unexplained, or otherwise anticipated “no” to the question of hedging FX is like a mystery. The way to decipher why executives won’t hedge, and convince them to act, is to remove the possible arguments against hedging, one by one.
Treasurers and risk managers who’ve been around the block recognize that fluctuating market rates rapidly affect their ability to capture that rate.
This article focuses on how you can set budget rates and align your FX strategy to increase confidence that your company will convert its forecast exposures at the budgeted conversion rate.
Fed minutes released yesterday revealed that apart from a unanimous agreement to raise interest rates for the first time in a decade last month, the committee expressed concerns as to the results of future Trump policies, with a view to maintain a “wait-and-see approach.”