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Currency Risk Management

CASE STUDY

You are... a UK based international management agency responsible for organising major rock concerts around the world.

Your Currency Risk involves... exchanging net foreign currency receipts for sterling within an agreed budget

Your business is different because... the precise timing and size of individual currency payments is uncertain

Your Aim is... to convert net foreign currency receipts into sterling at - or better than - a budgeted exchange rate.
and
to provide maximum cash flow benefits during the contract period, without compromising the budget rate.

Forward contracts could be used to cover the future anticipated cash flows. These give you certainty of exchange rate, allowing you to meet budget targets. Timing uncertainties could be managed in a variety of ways, from entering into an "option dated" forward or changing the ultimate value date of the transaction with the use of the FX swaps.

An alternative however, would be for you to purchase an option that gives you protection at your budget rate, but with no obligation to enter into the actual exchange at that level. This strategy would give you additional opportunity to benefit from a future improvement in the exchange rate whilst ensuring at worst, your budget rate will be met.

HOW?

Both these structures above, or indeed any other variation of hedging strategy can be put in place via a simple phone conversation with us. We are equally happy to visit you, under no obligation. Allow us to assist with putting in place a foreign exchange hedging programme that best suits your company's unique cash flow requirements, underlying business and appetite to risk.

• Guarantee your budget exchange rate
• Potential to benefit from a favourable move in rates in the future
• Manage erratic cash flows without compromising you currency hedge
• Manage cost factors prevalent in some foreign exchange option structures by allowing us to develop a tailored strategy

Contact our UK Corporate Foreign Exchange team for more details on how we can benefit you.