Currency Hedging:
Dynamic Hedging of Foreign Exchange Risk
Dynamic Hedging - Risk
Management
Definition: Hedge
- an act or means of
preventing complete loss of a bet or an investment, or the
like, with a partially counterbalancing or qualifying one.
- Making an investment to
reduce the risk of adverse price movements in an asset.
Normally, a hedge consists of taking an offsetting position
in related security, such as a futures contract.
- to enter transactions that
will protect against loss through a compensatory price
movement.
Hedging is best described as
a protective maneuver; a transaction intended to reduce the
risk of loss from price fluctuations. Do you have revenues or
expenses in multiple currencies? Has your business ever been
adversely affected because of changing interest rates? At ALFA
we do sophisticated static and dynamic hedging which can
protect your business.
We believe the best risk
management comes from understanding your industry and business
and combining this knowledge with ALFA’s expertise. Below is a
brief overview of the important steps we take to understand
how to best manage risk for your company.
- Identify
what you would benefit from hedging, by taking into account
the currencies, commodities and supplies you use and then
also examining the nature of your business, continual
transaction or
long-term projects
- Examine
your cash flow and how much you would be the optimal amount
to hedge.
- Prepare a draft risk
control policy statement policy for your management to
approve.
- Customize
a risk-control hedging procedure for
continuous implementation.
Risk management, hedging, is
a decision that faces business in the global markets. Let us
help you make the decision whether to hedge, what to hedge,
how much and how. With the expertise of our highly educated
team we strive to serve your business and protect your profits
from erosion due to changing market conditions.
Contact us for a confidential
consultation. |
