Hedge Foreign Exchange Risk in CNY - Chinese Yuan
Foreign Exchange Risk in Chinese Yuan (CNY)
When conducting transactions with China, you may need to send payments or receive payments in Chinese Yuan. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in CNY and the time you collect the CNY, or conversely between the time your supplier issues their invoice in CNY and you settle this invoice in CNY, the EUR/CNY rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/CNY rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/CNY. By locking in the EUR/CNY rate in advance, you gain better visibility on your future cash flows in Chinese Yuan (CNY) and secure your EUR/CNY budget rate.
Foreign Exchange Risk Hedging on Chinese Yuan (CNY) with Mondial Change
Mondial Change allows you to hedge your foreign exchange risk on the Chinese Yuan (CNY). The foreign exchange risk hedging on the Chinese Yuan can be done through fixed forward contracts or flexible forward contracts. It is also possible to hedge the exchange risk on CNY using currency options. You can use our hedging assistance tool which will help you select the most suitable hedging strategy for your needs. You can also schedule a meeting with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the Chinese Yuan (CNY).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in Chinese Yuan (CNY)
Are there minimum or maximum amounts to set up hedges in Chinese Yuan (CNY)?
The maximum amount of hedges in Chinese Yuan (CNY) that 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 maturity possible for hedges in Chinese Yuan (CNY)?
Generally, we do not offer hedges in Chinese Yuan (CNY) for maturities exceeding 24 months, but this can be considered on a case-by-case basis. Please contact our trading desk for a personalized study of your needs.
What are the setup fees for foreign exchange risk hedges in Chinese Yuan (CNY)?
All fees related to setting up hedges in Chinese Yuan (CNY) 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 Chinese Yuan (CNY)?
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 hedging contracts in Chinese Yuan (CNY) if the EUR/CNY rate (or any other pair on which you have validated a hedge) deteriorates beyond the variation margin or beyond your OTM. You must then deposit funds as collateral to maintain your contracts in Chinese Yuan (CNY) open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.
Are there minimum amounts for early drawdowns on flexible forward contracts in Chinese Yuan (CNY)?
No minimum amount for drawdowns on your flexible forward contracts in Chinese Yuan (CNY). You can draw autonomously on the online platform as many times as you wish between the contract initiation and the maturity date of your forward contract in Chinese Yuan (CNY).
What happens if at maturity of my forward contract in Chinese Yuan (CNY) 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 ask Mondial Change to extend your contract in Chinese Yuan (CNY) by a few months to give you time to use it. Mondial Change and its partners, however, reserve the right not to accept postponing the contract maturity date.
What is the current interest rate on the Chinese Yuan (CNY)?
The current interest rate on the Chinese Yuan (CNY) is "Currency Rate".
Are there carry points or discount points on forward contracts in Chinese Yuan (CNY)?
It all depends on whether you are a buyer or seller of Chinese Yuan (CNY) and against which currency you are trading the Chinese Yuan. If we take an example against the euro: If you are a buyer of Chinese Yuan (CNY) against the EUR, then there are report points because the interest rate of the Chinese Yuan (CNY) is supérieur to that of the EUR. Conversely, if you are a seller of Chinese Yuan (CNY) against the EUR, then there are déport points.