Hedging
In very simple terms, currency hedging is the act of entering into a financial contract in order to protect against unexpected, expected or anticipated changes in currency exchange rates. Currency hedging is used by financial investors and businesses to eliminate risks they encounter when conducting business internationally. Hedging can be likened to an insurance policy that limits the impact of foreign exchange risk.
Hedging can be accomplished by purchasing or booking different types of contracts that are designed to achieve specific goals. These goals are based on the level of risk the customer is exposed to and seeking protection from and allow the individual to lock in future rates without affecting, to a great extent, their liquidity.
Hedging can be a very complicated enterprise. The various hedging mechanisms range from basic to extremely intricate. The most prudent first steps, when considering a hedging strategy, would be to take note of potential FX exposure and, based on that, evaluate what goals need to be set and what actions need to be taken in order to mitigate that risk.
Hedging products
- Currency Options
- Currency Forwards
- Currency Futures
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If you have any questions about international payments, risk management or the specific products and services that Custom House offers, please don’t hesitate to Contact us
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Testimonial
“Working with Custom House has been a very positive experience. All of our transactions are now executed with precision, our wire transfers are delivered with speed and efficiency and we have access to Custom House’s incredibly competitive rates.
Furthermore, we have been able to take advantage of Custom House’s insights into the market place through webinars, breakfast seminars, World Market Updates and trader calls.”
Raymond St. Amour
Controller, Montreal Fish
Montreal, Quebec, Canada -
White Paper download
International Local Currency Payments - If you’re paying your international suppliers in USD and using foreign banks, you might want to read this whitepaper about an alternative strategy...
