© 2024 Olympia Currency & Global Payments - All rights reserved.
The foreign exchange market is dynamic and ever-changing. As businesses grow internationally, managing currency risk becomes essential for operations. Effective FX hedging solutions can provide predictability and stability against currency fluctuations. For market participants, it’s important not only to keep up with trends but also take proactive steps that mitigate volatility risk by stabilizing cash flows and protecting the exchange rates budgeted for foreign currencies.
To hedge currency risk, you need to enact FX strategies should the price of an exchange currency suddenly change. This process begins with identifying your exposure to exchange rate risk to develop a cohesive strategy about what to do (and when to act) under changing FX market conditions.
Forex hedging strategies can employ a wide variety of techniques and financial instruments, with forward contracts among the most popular for both large and small businesses when it comes to hedging their currency exposure.
With an FX forward contract, you can protect yourself from the fluctuations of foreign exchange rates by locking in your exchange rate (for a purchase or sale) at a pre-determined date.
Say, for example, your company has a payable or receivable with a 90-day term. This kind of time frame can be a long time in the markets, with lots of potential for price changes in both directions. Depending on the movements of the market, you could wind up being saddled with higher costs or see the value of your receivable diminish. Through the use of a forward contract, you can lock up an exchange rate, which offers your company predictability and protects your margins from currency fluctuations.
Forwards protect businesses and investors from uncertainty by setting an exchange rate well in advance of a future date.
Flexible terms make it easy to adjust forwards to your particular business needs and credit arrangements, as they can be left open for a certain period of time or settled at a pre-determined date.
Exchange rates are determined based on current forward rates and the spot rate at the time of the contract.
Managing risk is a vital part of your business. Our dedicated Account Managers will work with you to assess your current risks, safeguard your profits, and ensure your financial stability, so you can operate with confidence.
Get the Olympia Advantage. Contact Olympia Currency & Global Payments to learn how a risk management plan can help you navigate market volatility. www.olympiacgp.com/contact