Currency hedging strategies

Currency hedging strategies

Identify and mitigate the risk your business faces with a currency hedging solution

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Limit your FX exposure with our range of tools and options

Here's how we can help your business
Forward Contract

Forward Contract

Forwards allow you to buy currency on an agreed future date at a pre-fixed rate. This may require a deposit and allows you to lock in a rate for up to two years.*

Spot contract

Spot contract

This is an agreement between you and your FX provider to buy currency at the present exchange rate and can be used for imminent payments.

Market Order

Market Order

If you need a particular exchange rate but have no urgency to purchase straight away, a market order can help you secure a better deal.

Currency options

Currency options

The most basic option offers the right - but not the obligation - to exchange currency at a known rate for a known date in the future**.

FAQs on currency hedging

What is currency hedging?

Currency hedging is the practice of protecting your business from unwanted exchange rate movements. This can be done via currency contracts or options, all of which have different functions and goals. Ultimately, however, these help to limit your exposure to market volatility and provide a more stable footing when trading.

With hedging solutions in place, you can manage your currency risk and essentially protect your funds against any exchange rate movements. 

How can my business benefit from a currency hedging strategy?

Whether your organisation is an importer of goods from abroad, regularly receives payment in foreign currencies or relies on paying international staff in local currency, FX requirements increase your exposure to ever-fluctuating exchange rates.

While the price of imports, exports, services and wages may be relatively stable in many lines of business, the value of each transaction when made via an international payment can fluctuate greatly over the course of the year. As a result, it can be harder to estimate your income and outgoings, which of course can directly affect your profits.

Hedging allows you to protect yourself from any negative foreign exchange movements by potentially locking in a more favourable rate via one or several hedging options.

Which currency hedging strategies are there?

Your dedicated account manage can work with you to tailor make the ideal strategy for hedging your currency exposure. This could include utilising a range of currency contracts, including forwards, spots and market orders. Alternatively, hedging risk with options could be a more appropriate fit for your business. 

We offer a wide range of hedging options, all of which have their own unique benefits and requirements. Zero cost options exist to provide a contract that naturally require no up-front payment, while premium options command a fee, however aim to provide a better exchange rate. Alternatively, out-performance options offer a specialist means of hedging for businesses.

All of our currency hedging solutions can be discussed with your account manager who will direct you to the accredited dealer.

Assessing currency risk

Assessing currency risk

Find out how to limit the foreign currency exposure of your business with our brochure.

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Foreign Exchange Solutions

Foreign Exchange Solutions

Our team will identify your individual requirements to be able to suggest foreign exchange solutions including Spot Contracts, Market Orders and Forward Contracts. 

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Payment Solutions

Payment Solutions

We provide payment solutions for businesses with local or international requirements, who are looking to simplify the process and cut on-going costs. 

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