Foreign Currency Hedging: Don’t let Global Risk Impact your Bottom Line
Managing foreign currency risk presents a significant challenge for companies doing business internationally. Foreign exchange (FX) rates fluctuate constantly, and this volatility must be hedged effectively in order to minimize negative financial statement impacts.
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, and this is especially true in foreign currency hedges since their market values can be so volatile.
Examples of foreign currency hedges include
- A domestic manufacturing company hedging against falling international currencies in their primary selling 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.
Free Consultation: Foreign Currency Hedging
DerivGroup has extensive experience in the following foreign currency hedging scenarios, among others:
- Foreign currency denominated sales and purchases
- FX loan and bond hedging
- Net investment hedging
- Forwards, options, and collars
- Non-deliverable currencies
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.
In addition, DerivGroup relieves the burden of complex reporting standards by supplying all necessary documentation and data, including: initial hedge designation, hedge inception documentation, effectiveness testing, ongoing journal entries, shock analyses, sensitivity analyses, and more.
DerivGroup is an independent financial advisor serving the corporate, non-profit, tax-exempt and municipal debt markets. DerivGroup helps implement the right hedge structure for you, at the right price, with the best terms.