Maintain your old Siemens Hipath system

Why Hedge Foreign Currency Risk?

International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.

Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.

Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.

Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.

John Nobile - Senior Account Executive
CFOS/FX - Online Forex Spot and Options Brokerage

In The News:

South Korea new coronavirus front as 100 fresh cases confirmed
Fri, 21 Feb 2020 12:50:00 +0000
South Korea has become the newest front for the coronavirus outbreak outside China as 100 new cases were confirmed on Friday.

Russia showing a 'lack of humanity' in Syria, says UK's UN ambassador
Fri, 21 Feb 2020 10:09:00 +0000
Britain's UN ambassador Karen Pierce has accused Russia of a "lack of humanity" in Syria, as the UN revealed that more than half of the nearly million people displaced in Idlib province by the escalating conflict are children.

£150k raised to send bullied schoolboy to Disneyland
Fri, 21 Feb 2020 13:03:00 +0000
A comedian has raised more than $200,000 (£154,000) after setting up a fundraising page to send a nine-year-old boy who is being bullied because of his dwarfism to Disneyland.

Countdown to Taliban-US truce in bid to end 18-year Afghan war
Fri, 21 Feb 2020 15:52:00 +0000
The end of 18 years of war in Afghanistan could be in sight as the countdown to signing a peace agreement between the Taliban and the United States will begin on Friday.

Bollywood releases 'first film with gay man as lead character'
Fri, 21 Feb 2020 16:24:00 +0000
A rom-com touted as Bollywood's first film to feature a gay male lead character has been released in cinemas.



tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

Internet and Computer Systems in the FOREX Business

With every passing year the interest in electronic trading is... Read More

Commodity Trading - Advantages and Disadvantages

What Is Commodity Trading?Commodity futures markets allow commercial producers and... Read More

Choosing A Forex Broker

With currency trading becoming ever more popular, the number of... Read More

Where is the Market Going?

If you ask me whether the market will have moved... Read More

Assessing the Opportunities Presented by the New Iraqi Currency

Could it be possible that you are staring right into... Read More

The Margin Advantages of Trading FOREX.

There is one aspect that is considered as one of... Read More

Experience

Throughout our course on futures trading, we have tried to... Read More

What I Learnt Losing £60,000 My First Year as a Full-time Trader

During my first year as a local (independent trader) on... Read More

Forex Market Overview

"FX" is an abbreviation of "forex" or "foreign exchange." Foreign... Read More

Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information

Profitable day traders recognize that momentum trading is among the... Read More

Your Mother Could Make Money In Forex Trading

The question would be not whether she could but rather... Read More

How Currencies are Traded in the FOREX Market

Currencies are traded in dollar amounts called "lots". At 100:1... Read More

10 Steps To Professional Day Trading

Everyone trades a little differently. The trading method outlined below... Read More

A Short Introduction To FOREX

FOREX is the world's largest and most liquid trading market.... Read More

A Look at Forex Market Makers

The investor in the currency market takes for granted that... Read More

Online Forex

Q1: When you consider that the foreign exchange market has... Read More

Facts of Day Trading

Are you thinking of entering the fast-paced world of day... Read More

Discovering Turnaround Candidates

There are many types of investment methodology out there. All... Read More

The Secret of Reduced Margin Spreads

One of the best kept secrets in trading is that... Read More

Forex Trading Can Be Like Day-trading

Forex trading, or foreign currency trading, has become a bit... Read More

Learn Forex Trading - a Guide for Beginners

One can learn forex trading as easily as one would... Read More

An Evaluation of the Devaluation

A Minister of Finance is morally right to lie about... Read More

How To Choose Wisely A FOREX Broker

Most traders use a FOREX broker to handle their transactions.... Read More

Intrenet Marketing VS Forex Currency Trading

Have you noticed that when someone's trying to sell you... Read More

What is Forex Trading?

Forex, or Foreign Exchange, is the simultaneous exchange of one... Read More