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Covering Foreign Exchange Risk in MWK - Malawian Kwacha

Drapeau Covering Foreign Exchange Risk in MWK - Malawian Kwacha

Foreign Exchange Risk on the MWK – Malawian Kwacha

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

Foreign Exchange Risk Coverage on the Malawian Kwacha (MWK) with Mondial Change

Mondial Change allows you to cover your foreign exchange risk on the Malawian Kwacha (MWK). The foreign exchange risk coverage on the Malawian Kwacha 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. On the contract 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 desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the Malawian Kwacha (MWK).

To obtain accurate quotes on your Malawian Kwacha (MWK) hedges, we invite you to contact our trading desk.

Mondial Change answers all your questions on foreign exchange risk coverage for your operations in Malawian Kwacha (MWK)

Are there minimum or maximum amounts to set up hedges in Malawian Kwacha (MWK)?

The maximum amount of hedges in Malawian Kwacha (MWK) 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 Malawian Kwacha (MWK)?

Generally, we do not offer hedges in Malawian Kwacha (MWK) 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 Malawian Kwacha (MWK)?

All fees related to setting up hedges in Malawian Kwacha (MWK) 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 Malawian Kwacha (MWK)?

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 Malawian Kwacha (MWK) hedging contracts if the EUR/MWK 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 Malawian Kwacha (MWK) 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 the Malawian Kwacha (MWK)?
The current interest rate on the Malawian Kwacha (MWK) is "Currency Rate".

Are there carry points or discount points on forward contracts in Malawian Kwacha (MWK)?

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

YOUR HEDGING NEED IN MWK
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