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Hedge Foreign Exchange Risk in ETB - Ethiopian Birr

Drapeau Hedge Foreign Exchange Risk in ETB - Ethiopian Birr

The Foreign Exchange Risk in Ethiopian Birr (ETB)

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

Foreign Exchange Risk Coverage on Ethiopian Birr (ETB) with Mondial Change

Mondial Change allows you to hedge your foreign exchange risk on Ethiopian Birr (ETB). Currently, foreign exchange risk coverage on Ethiopian Birr 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 Ethiopian Birr (ETB).

To obtain accurate quotes on your hedges in Ethiopian Birr (ETB), we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Coverage for Your Operations in Ethiopian Birr (ETB)

Are there minimum or maximum amounts to set up hedges in Ethiopian Birr (ETB)?

The maximum amount of hedges in Ethiopian Birr (ETB) 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 Ethiopian Birr (ETB)?

Generally, we do not offer hedges in Ethiopian Birr (ETB) for maturities exceeding 24 months, but this can be reviewed 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 Ethiopian Birr (ETB)?

All fees related to the setup of hedges in Ethiopian Birr (ETB) 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 Ethiopian Birr (ETB)?

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 Ethiopian Birr (ETB) if the EUR/ETB 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 Ethiopian Birr (ETB) contracts open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.

What is the current interest rate on Ethiopian Birr (ETB)?
The current interest rate on Ethiopian Birr (ETB) is "Currency Rate".

Are there carry points or discount points on NDF contracts in Ethiopian Birr (ETB)?

It all depends on whether you are a buyer or seller of Ethiopian Birr (ETB) and against which currency you are trading the Ethiopian Birr. If we take an example against the euro: If you are a buyer of Ethiopian Birr (ETB) against the EUR, then there are déport points because the interest rate of Ethiopian Birr (ETB) is inférieur to that of the EUR. Conversely, if you are a seller of Ethiopian Birr (ETB) against the EUR, then there are report points.

YOUR HEDGING NEED IN ETB
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