When conducting transactions with Bahrain, you may need to send or receive payments in mvdol. You are then naturally exposed to currency risk. Indeed, between the time you invoice your client in BOV and the time you collect the BOV, or conversely between the time your supplier issues their invoice in BOV and you settle this invoice in BOV, the EUR/BOV exchange rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/BOV exchange rate movement (assuming your accounting currency is EUR) over a specified period that you can set up hedges on the EUR/BOV. By locking in the EUR/BOV rate in advance, you gain better visibility on your future cash flows in mvdol (BOV) and secure your EUR/BOV budget rate.
Global Exchange allows you to hedge your currency risk on mvdol (BOV). Currency risk hedging on mvdol can currently only be done through NDF (non-deliverable forwards) contracts. The NDF is a hedging instrument used to cover your currency 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 currency risk without any flow being paid in the non-convertible currency. You can schedule a meeting with our trading desk. A market expert advisor will assist you in setting up your currency hedges on mvdol (BOV).
To obtain accurate quotes on your mvdol (BOV) hedges, we invite you to contact our trading desk.
Are there minimum or maximum amounts for setting up hedges in mvdol (BOV)?
The maximum amount of hedges in mvdol (BOV) 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. As for 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 mvdol (BOV)?
What are the setup fees for currency risk hedges in mvdol (BOV)?
All fees related to setting up hedges in mvdol (BOV) 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 margin deposit required to take a hedge in mvdol (BOV)?
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 margin deposit. Depending on your line conditions, margin calls may be triggered on your mvdol (BOV) hedging contracts if the EUR/BOV 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 mvdol (BOV) contracts open. Based on the review of your financial statements, lines without margin calls may sometimes be granted.
Are there carry points or forward points on mvdol (BOV) forward contracts?
It all depends on whether you are a buyer or seller of mvdol (BOV) and against which currency you are trading the mvdol. If we take an example against the euro: If you are a buyer of mvdol (BOV) against the EUR, then there are déport points because the interest rate of mvdol (BOV) is inférieur to that of the EUR. Conversely, if you are a seller of mvdol (BOV) against the EUR, then there are report points.
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