Hedging Foreign Exchange Risk in MXN - Mexican Peso
The Foreign Exchange Risk in Mexican Peso (MXN)
When conducting transactions with Mexico, you may need to send or receive payments in Mexican Peso. You are then naturally exposed to foreign exchange risk. Indeed, between the moment you invoice your client in MXN and the moment you collect the MXN, or conversely between the moment your supplier issues their invoice in MXN and when you settle this invoice in MXN, the EUR/MXN rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/MXN rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/MXN. By locking in the EUR/MXN rate in advance, you gain better visibility on your future cash flows in Mexican Peso (MXN) and secure your EUR/MXN budget rate.
Hedging Foreign Exchange Risk on the Mexican Peso (MXN) with Mondial Change
Mondial Change allows you to hedge your foreign exchange risk on the Mexican Peso (MXN). The foreign exchange risk hedging on the Mexican Peso can be done through fixed forward contracts or flexible forward contracts. It is also possible to hedge the risk on MXN using currency options. You can use our hedging assistance tool which will help you select the most suitable hedging strategy for your needs. You can also schedule a consultation with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the Mexican Peso (MXN).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in Mexican Peso (MXN)
Are there minimum or maximum amounts for setting up hedges in Mexican Peso (MXN)?
The maximum amount of hedges in Mexican Peso (MXN) 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. 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 Mexican Peso (MXN)?
Generally, we do not offer hedges in Mexican Peso (MXN) 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 hedges against foreign exchange risk in Mexican Peso (MXN)?
All fees related to setting up hedges in Mexican Peso (MXN) 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 Mexican Peso (MXN)?
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 Mexican Peso (MXN) hedging contracts if the EUR/MXN 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 maintain your Mexican Peso (MXN) contracts open. Based on the analysis of your financial statements, lines without margin calls may sometimes be granted.
Are there minimum amounts for early drawdowns on flexible forward contracts in Mexican Peso (MXN)?
No minimum amount for drawdowns on your flexible forward contracts in Mexican Peso (MXN). You can draw independently on the online platform as many times as you wish between the contract initiation and the maturity date of your forward contract in Mexican Peso (MXN).
What happens at the maturity of my forward contract in Mexican Peso (MXN) if I have not used the entirety of my contract?
In this case, there are two possibilities. You can sell the balance of your contract by paying the potential exchange loss if the exchange rate at the time of resale is less favorable than your contract rate. Alternatively, you can request Mondial Change to extend your Mexican Peso (MXN) contract by a few months to give you time to use it. Mondial Change and its partners reserve the right not to accept the extension of the contract's maturity date.
What is the current interest rate on the Mexican Peso (MXN)?
The current interest rate on the Mexican Peso (MXN) is "Currency Rate".
Are there carry points or discount points on forward contracts in Mexican Peso (MXN)?
It all depends on whether you are a buyer or seller of Mexican Peso (MXN) and against which currency you are trading the Mexican Peso. If we take an example against the euro: If you are a buyer of Mexican Peso (MXN) against the EUR, then there are report points because the interest rate of the Mexican Peso (MXN) is supérieur to that of the EUR. Conversely, if you are a seller of Mexican Peso (MXN) against the EUR, then there are déport points.