Foreign Currency Hedging
Don’t Let Currency Fluctuations Ruin Your Bottom Line
Foreign currency risk presents significant challenges for companies doing business internationally. Foreign exchange (FX) rates fluctuate constantly, and this volatility must be hedged effectively in order to minimize income statement volatility.
DerivGroup’s Approach to Foreign Currency Hedging
DerivGroup begins every foreign currency hedging case by thoroughly analyzing the client’s FX exposures and their timing. As your objective advisor, DerivGroup assesses your risks, objectives, and constraints to determine which hedging option offers the best risk management solution.
In most cases, a parallel accounting solution is also critical to establishing an effective foreign currency hedging program. DerivGroup designs all hedging programs with a clear focus on accounting issues. This is especially true with foreign currency hedges since their market values are so volatile.
Foreign Currency Hedging Examples
- A domestic manufacturing company hedging against a decline in value of their foreign currency revenues in their overseas markets.
- A company who has purchased a foreign competitor and wants to lock in an exchange rate while waiting for due diligence to complete the sale.
Hedge Accounting & Valuation for Foreign Currency Hedges
Accurate Hedge Accounting for Currency Hedging Transactions
In addition to recommending and executing a suitable foreign currency hedging strategy, DerivGroup adds value with a range of hedge accounting and valuation services associated with the hedge. By doing so, DerivGroup ensures that each client implements the right derivative, at the right price, on the best terms.
Comprehensive Reporting & Documentation for Foreign Currency Hedges
We handle complex reporting standards by supplying all necessary documentation, including:
✓ Hedge designation
✓ Effectiveness testing
✓ Ongoing journal entries
✓ Shock and sensitivity analyses
Free Consultation: Foreign Currency Hedging Services
DerivGroup can help you successfully navigate the complexities of foreign currency hedging.