Intermediate
Hedging an importer foreign currency payment
An importer hedge starts with an invoice, not a market forecast. The objective is to control the home currency cost of a known foreign currency payment.
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Forwards Trading Guide
Understand forward contracts, interpret quotes and build currency, commodity and portfolio hedges. Follow ten stages from contract basics to advanced valuation, execution and disciplined risk management.
Start with What a forward contract commits you to, then follow the next lesson links. Explore 40 lessons with worked examples, exercises and further reading.
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Currency Hedging Strategies · All lessons
Currency Hedging Strategies
Design hedges around real payments, receipts and uncertain business forecasts.
Intermediate
Hedging exporter receipts
An exporter expecting foreign currency receipts faces the opposite exposure to an importer. The hedge direction should follow the receipt, not the name of the currency...
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Intermediate
Layered hedges and rolling programmes
Layering spreads hedge decisions across time. It can reduce dependence on one dealing date, but it does not guarantee a better exchange rate.
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Intermediate
Forecast uncertainty and overhedging
A hedge can become a new exposure when the business forecast changes. The amount that is likely to occur matters as much as the quoted exchange...
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