When conducting transactions with Brazil, you may need to send or receive payments in Brazilian Real. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in BRL and the time you collect the BRL, or conversely between the time your supplier issues their invoice in BRL and you settle this invoice in BRL, the EUR/BRL rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/BRL rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/BRL. By locking in the EUR/BRL rate in advance, you gain better visibility on your future cash flows in Brazilian Real (BRL) and secure your EUR/BRL budget rate.
Mondial Change allows you to hedge your foreign exchange risk on Brazilian Real (BRL). The foreign exchange risk coverage on Brazilian Real can currently 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 cash flow being exchanged in the non-convertible currency. You can schedule a meeting with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on Brazilian Real (BRL).
To obtain accurate quotes on your Brazilian Real (BRL) hedges, we invite you to contact our trading desk.
Are there minimum or maximum amounts to set up hedges in Brazilian Real (BRL)?
The maximum amount of hedges in Brazilian Real (BRL) 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 hedges in Brazilian Real (BRL)?
What are the setup fees for hedges against foreign exchange risk in Brazilian Real (BRL)?
All fees related to setting up hedges in Brazilian Real (BRL) are included in the exchange rate communicated to you before the validation of your operation. The hedging is done by phone with a trading desk operator. No fees are applied to the use of your hedges.
Is a security deposit required to take a hedge in Brazilian Real (BRL)?
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 Brazilian Real (BRL) hedging contracts if the EUR/BRL 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 Brazilian Real (BRL) contracts open. Based on your financial statements, lines without margin calls can sometimes be granted.
What is the current interest rate on the Brazilian Real (BRL)?
The current interest rate on the Brazilian Real (BRL) is « Currency Rate ».
Are there carry points or discount points on NDF contracts in Brazilian Real (BRL)?
It all depends on whether you are a buyer or seller of Brazilian Real (BRL) and against which currency you are trading the Brazilian Real. For example, against the euro: If you are a buyer of Brazilian Real (BRL) against the EUR, there are report points because the interest rate of the Brazilian Real (BRL) is supérieur compared to that of the EUR. Conversely, if you are a seller of Brazilian Real (BRL) against the EUR, there are déport points.
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