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Lock in future exchange rates today to eliminate currency risk and protect margins on international commitments.
An EU-based importer has a $1,000,000 inventory payment due in 90 days.
Possible outcomes in 90 days:
Dollar strengthens to 1.0500: cost rises to €952,380.95, a €43,290.04 loss against budget
Rate holds near 1.0900: cost is €917,431.19, an €8,340.28 loss against budget
Dollar weakens to 1.1500: cost falls to €869,565.22, a €39,525.69 gain against budget
No way to know which of these you'll get until the day the payment falls due.
Outcome in 90 days, regardless of where the market goes:
If the market moved to 1.0500: you still settle at 1.0980, a saving of €41,634.14 versus the unhedged cost
If the market moved to 1.0900: you still settle at 1.0980, a saving of €6,684.38 versus the unhedged cost
If the market moved to 1.1500: you still settle at 1.0980, costing €41,181.59 more than the unhedged spot outcome, but your budget never moved
The forward doesn't guess which way the market goes. It gives you one number, agreed today, that holds no matter what happens between now and settlement.
Figures shown are illustrative only, based on hypothetical rates for explanatory purposes. Actual forward rates depend on prevailing market conditions at the time of booking.
Lock in rates and eliminate downside risk on future commitments
Remove FX volatility from forecasts and protect margins
7 days to 5 years forward. Flexible terms to match your commitment
Secure profit margins on international sales and purchases
Lock costs on future inventory purchases. If you order €500k goods for delivery in 90 days, hedge the full amount to fix your cost today and protect gross margin.
Secure revenue from international sales. If you invoice $2M due in 120 days, hedge to lock your revenue and eliminate FX risk on the receivable.
Hedge multi-currency project revenues. If awarded a €6M contract over 12 months, layer forwards (€500k monthly) to protect each milestone payment.
Manage systematic FX exposures. If you have recurring EUR expenses (payroll, rent), use rolling forwards to hedge 6-12 months forward at all times.
Speak with our risk management team to design your hedging strategy.