PROTECT YOUR BUSINESS FROM CURRENCY FLUCTUATIONS

Hedging

Hedging is a strategy to protect against fluctuating exchange rates. Our customers typically hedge in two ways :

1. Cashflow Hedge

This occurs where customers hedge against an incoming receipt or outgoing payment in another currency. The hedge gives certainty of the cashflow in the native currency, which is not effected by any change in exchange rates.

We also know that all businesses need to develop clear risk management strategies. This enables our clients to minimise their exposure, lock in profits, reduce earnings fluctuations and even explore opportunities for enhancing their financial position. But, we know that we need to keep things simple where we can.

Examples of uses include

  • Hedging of annual stock purchases, to give certainty over pricing
  • Profits from a foreign subsidiary
  • Repayments of loans in other currencies

Please click here for more information on cashflow Hedging

2. Fair Value Hedges

For the non-GBP assets and liabilities in their balance sheet that need to be restated at closing rates at each reporting date.

Examples of uses include

  • The carrying value of loans in other currencies
  • The acquisition cost of a foreign investment

Please click here for more information on Fair Value Hedges

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Exchange Rates


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