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Hedge Foreign Exchange Risk in ERN - Eritrean Nakfa

Drapeau Hedge Foreign Exchange Risk in ERN - Eritrean Nakfa

Foreign Exchange Risk Coverage on Eritrean Nakfa (ERN) with Mondial Change

Mondial Change allows you to hedge your foreign exchange risk on Eritrean Nakfa (ERN). Currently, foreign exchange risk coverage on Eritrean Nakfa can 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 Eritrean Nakfa (ERN).

To obtain accurate quotes on your Eritrean Nakfa (ERN) hedges, we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Coverage for Your Eritrean Nakfa (ERN) Transactions

Are there minimum or maximum amounts for setting up hedges in Eritrean Nakfa (ERN)?

The maximum amount of hedges in Eritrean Nakfa (ERN) you can validate primarily depends on the size of the forward exchange line granted to you. The granted line conditions depend on the review of your financial statements. Regarding minimum sizes, we generally do not take hedges for amounts less than 10,000 EUR (or equivalent in other currencies).

What is the maximum possible maturity for hedges in Eritrean Nakfa (ERN)?

Generally, we do not offer hedges in Eritrean Nakfa (ERN) 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 foreign exchange risk hedges in Eritrean Nakfa (ERN)?

All fees related to setting up hedges in Eritrean Nakfa (ERN) are included in the exchange rate communicated to you before validating your transaction. 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 Eritrean Nakfa (ERN)?

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 Eritrean Nakfa (ERN) hedging contracts if the EUR/ERN rate (or any other pair on which you have validated a hedge) deteriorates beyond the variation margin or beyond your OTM. In such cases, you must deposit funds as collateral to keep your Eritrean Nakfa (ERN) contracts open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.

Are there carry points or discount points on forward contracts in Eritrean Nakfa (ERN)?

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

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