When conducting transactions with Bahrain, you may need to send or receive payments in Bermudian Dollar. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in BMD and the time you collect the BMD or conversely between the time your supplier issues their invoice in BMD and you settle this invoice in BMD, the EUR/BMD rate may have moved in your favor or against you. To eliminate or minimize this risk of EUR/BMD rate movement (assuming your accounting currency is EUR) over a determined period, you can implement hedges on the EUR/BMD. By locking in the EUR/BMD rate in advance, you gain better visibility on your future cash flows in Bermudian Dollar (BMD) and secure your EUR/BMD budget rate.
Mondial Change allows you to hedge your foreign exchange risk on the Bermudian Dollar (BMD). Currently, foreign exchange risk coverage on the Bermudian Dollar can only be achieved through NDF (non-deliverable forwards) contracts. The NDF is a hedging instrument used to cover your foreign exchange risk on partially or non-convertible currencies. At the contract's expiration date, the rate at which the contract was concluded is compared with the fixing rate. The latter is official and published daily by the Central Bank of the concerned country. The NDF price represents the probability of a revaluation (or devaluation) of the currency. Therefore, the NDF price will not be linked to the interest rate differential between the two currencies involved. The NDF thus allows you to hedge your foreign exchange risk without any flow being paid in the non-convertible currency. You can schedule a meeting with our trading room. An expert market advisor will assist you in setting up your foreign exchange hedges on the Bermudian Dollar (BMD).
To obtain accurate quotes on your Bermudian Dollar (BMD) hedges, we invite you to contact our trading room.
Are there minimum or maximum amounts for setting up hedges in Bermudian Dollar (BMD)?
The maximum amount of hedges in Bermudian Dollar (BMD) you can validate primarily depends on the size of the forward exchange line granted to you. The line conditions granted depend on the review of your financial statements. Regarding minimum sizes, we generally do not take hedges for amounts below 10,000 EUR (or equivalent in other currencies).
What is the maximum possible maturity for Bermudian Dollar (BMD) hedges?
What are the setup fees for hedges against foreign exchange risk in Bermudian Dollar (BMD)?
All fees related to setting up Bermudian Dollar (BMD) hedges are included in the exchange rate communicated to you before validating your operation. The hedge is taken by phone with a trading room operator. No fees are applied to the use of your hedges.
Is a security deposit required to take a hedge in Bermudian Dollar (BMD)?
Again, this depends on the conditions of your forward exchange line. Thanks to its network of partners, Mondial Change generally manages to obtain forward exchange lines without an initial security deposit. Depending on your line conditions, margin calls may be triggered on your Bermudian Dollar (BMD) hedging contracts if the EUR/BMD rate (or any other pair on which you have validated a hedge) deteriorates beyond the variation margin or beyond your OTM. In this case, you must deposit funds as collateral to keep your Bermudian Dollar (BMD) contracts open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.
Are there carry points or forward points on Bermudian Dollar (BMD) forward contracts?
It all depends on whether you are a buyer or seller of Bermudian Dollar (BMD) and against which currency you are trading the Bermudian Dollar. If we take an example against the euro: If you are a buyer of Bermudian Dollar (BMD) against the EUR, then there are déport points because the interest rate of the Bermudian Dollar (BMD) is inférieur to that of the EUR. Conversely, if you are a seller of Bermudian Dollar (BMD) against the EUR, then there are report points.
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