When conducting transactions with Australia, you may need to send payments or receive payments in convertible mark. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in BAM and the time you collect the BAM or conversely between the time your supplier issues their invoice in BAM and you settle this invoice in BAM, the EUR/BAM exchange rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/BAM exchange rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/BAM. By locking in the EUR/BAM rate in advance, you effectively gain better visibility on your future cash flows in convertible mark (BAM) and secure your EUR/BAM budget rate.
Global Exchange allows you to cover your foreign exchange risk on convertible mark (BAM). The foreign exchange risk coverage on convertible mark can currently 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 cover your foreign exchange risk without any cash flow being exchanged in the non-convertible currency. You can schedule a meeting with our trading room. A market expert advisor will assist you in setting up your foreign exchange hedges on convertible mark (BAM).
To obtain accurate quotes on your convertible mark (BAM) hedges, we invite you to contact our trading room.
Are there minimum or maximum amounts to set up hedges in convertible mark (BAM)?
The maximum amount of hedges in convertible mark (BAM) 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 possible maturity for hedges in convertible mark (BAM)?
What are the setup fees for foreign exchange risk coverage in convertible mark (BAM)?
All fees related to setting up hedges in convertible mark (BAM) are included in the exchange rate communicated to you before validating your operation. The hedge is taken over the 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 convertible mark (BAM)?
Again, this 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 convertible mark (BAM) hedge contracts if the EUR/BAM 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 convertible mark (BAM) contracts open. Based on the review of your financial statements, lines without margin calls may sometimes be granted.
Are there carry points or discount points on forward contracts in convertible mark (BAM)?
It all depends on whether you are a buyer or seller of convertible mark (BAM) and against which currency you are trading the convertible mark. If we take an example against the euro: If you are a buyer of convertible mark (BAM) against the EUR, then there are déport points because the interest rate of the convertible mark (BAM) is inférieur to that of the EUR. Conversely, if you are a seller of convertible mark (BAM) against the EUR, then there are report points.
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