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Hedging Foreign Exchange Risk in COP - Colombian Peso

Drapeau Hedging Foreign Exchange Risk in COP - Colombian Peso

The Foreign Exchange Risk in Colombian Peso (COP)

When conducting transactions with Colombia, you may need to send or receive payments in Colombian Peso. You are naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in COP and the time you collect the COP, or conversely between the time your supplier issues their invoice in COP and you settle this invoice in COP, the EUR/COP exchange rate may have moved in your favor or against you. To eliminate or minimize this risk of EUR/COP exchange rate movement (assuming your accounting currency is EUR) over a specified period, you can implement hedges on the EUR/COP. By locking in the EUR/COP rate in advance, you gain better visibility on your future cash flows in Colombian Peso (COP) and secure your EUR/COP budget rate.

Hedging Foreign Exchange Risk on Colombian Peso (COP) with Mondial Change

Mondial Change allows you to hedge your foreign exchange risk on the Colombian Peso (COP). Currently, hedging foreign exchange risk on the Colombian Peso can only be done 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 transferred in the non-convertible currency. You can schedule a meeting with our trading desk. A market expert advisor will assist you in setting up your foreign exchange hedges on the Colombian Peso (COP).

To obtain accurate quotes on your Colombian Peso (COP) hedges, we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in Colombian Peso (COP)

Are there minimum or maximum amounts for setting up hedges in Colombian Peso (COP)?

The maximum amount of hedges in Colombian Peso (COP) you can validate primarily depends on the size of the forward exchange line granted to you. The line conditions granted depend on the analysis of your financial statements. As for 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 Colombian Peso (COP)?

Generally, we do not offer hedges in Colombian Peso (COP) 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 hedging against foreign exchange risk in Colombian Peso (COP)?

All fees related to setting up hedges in Colombian Peso (COP) 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 Colombian Peso (COP)?

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 Colombian Peso (COP) hedging contracts if the EUR/COP 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 Colombian Peso (COP) contracts open. Based on the analysis of your financial statements, lines without margin calls can sometimes be granted.

What is the current interest rate on the Colombian Peso (COP)?
The current interest rate on the Colombian Peso (COP) is "Currency Rate".

Are there carry or discount points on NDF contracts in Colombian Peso (COP)?

It all depends on whether you are a buyer or seller of Colombian Peso (COP) and against which currency you are trading the Colombian Peso. For example, against the euro: If you are a buyer of Colombian Peso (COP) against the EUR, there are report points because the interest rate of the Colombian Peso (COP) is supérieur compared to that of the EUR. Conversely, if you are a seller of Colombian Peso (COP) against the EUR, there are déport points.

YOUR HEDGING NEED IN COP
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