Hedge Foreign Exchange Risk in CAD - Canadian Dollar
The Foreign Exchange Risk in Canadian Dollar (CAD)
When conducting transactions with Canada, you may need to send or receive payments in Canadian Dollar. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in CAD and the time you collect the CAD, or conversely between the time your supplier issues their invoice in CAD and you settle this invoice in CAD, the EUR/CAD rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/CAD rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/CAD. By locking in the EUR/CAD rate in advance, you gain better visibility on your future cash flows in Canadian Dollar (CAD) and secure your EUR/CAD budget rate.
Hedging Foreign Exchange Risk on the Canadian Dollar (CAD) with Global Exchange
Global Exchange allows you to hedge your foreign exchange risk on the Canadian Dollar (CAD). The foreign exchange risk hedging on the Canadian Dollar can be done through fixed forward contracts or flexible forward contracts. It is also possible to hedge the exchange risk on CAD using currency options. You can use our hedging assistance tool to help you select the most suitable hedging strategy for your needs. You can also schedule a consultation with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the Canadian Dollar (CAD).
Global Exchange Answers All Your Questions on Foreign Exchange Risk Hedging for Your Canadian Dollar (CAD) Operations
Are there minimum or maximum amounts for setting up hedges in Canadian Dollar (CAD)?
The maximum amount of hedges in Canadian Dollar (CAD) 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 Canadian Dollar (CAD)?
Generally, we do not offer hedges in Canadian Dollar (CAD) for maturities exceeding 24 months, but this can be considered on a case-by-case basis. Please contact our trading desk for a personalized assessment of your needs.
What are the setup fees for hedges against foreign exchange risk in Canadian Dollar (CAD)?
All fees related to setting up hedges in Canadian Dollar (CAD) are included in the exchange rate communicated to you before validating 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 Canadian Dollar (CAD)?
This again depends on the conditions of your forward exchange line. Thanks to its network of partners, Global Exchange generally manages to obtain forward exchange lines without an initial security deposit. Depending on your line conditions, margin calls may be triggered on your Canadian Dollar (CAD) hedging contracts if the EUR/CAD 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 Canadian Dollar (CAD) contracts open. Based on the review of your financial statements, lines without margin calls may sometimes be granted.
Are there minimum amounts for early drawdowns on flexible forward contracts in Canadian Dollar (CAD)?
No minimum amount for drawdowns on your flexible forward contracts in Canadian Dollar (CAD). You can draw down autonomously on the online platform as many times as you wish between the contract initiation and the maturity date of your forward contract in Canadian Dollar (CAD).
What happens if at the maturity of my forward contract in Canadian Dollar (CAD) I have not used the entirety of my contract?
In this case, there are two possibilities. You can sell the balance of your contract by paying the potential exchange loss if the exchange rate at the time of resale is less favorable than your contract rate. Alternatively, you can request Global Exchange to extend your Canadian Dollar (CAD) contract by a few months to give you time to use it. However, Global Exchange and its partners reserve the right not to accept extending the contract maturity date.
What is the current interest rate on the Canadian Dollar (CAD)?
The current interest rate on the Canadian Dollar (CAD) is "Currency Rate".
Are there carry points or discount points on forward contracts in Canadian Dollar (CAD)?
It all depends on whether you are a buyer or seller of Canadian Dollar (CAD) and against which currency you are trading the Canadian Dollar. If we take an example against the euro: If you are a buyer of Canadian Dollar (CAD) against the EUR, then there are report points because the interest rate of the Canadian Dollar (CAD) is supérieur compared to the EUR. Conversely, if you are a seller of Canadian Dollar (CAD) against the EUR, then there are déport points.