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Covering Foreign Exchange Risk in TWD - New Taiwan Dollar

Drapeau Covering Foreign Exchange Risk in TWD - New Taiwan Dollar

Foreign Exchange Risk in New Taiwan Dollar (TWD)

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

Foreign Exchange Risk Coverage on New Taiwan Dollar (TWD) with Global Exchange

Global Exchange allows you to cover your foreign exchange risk on the New Taiwan Dollar (TWD). Currently, foreign exchange risk coverage on the New Taiwan Dollar 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 currency revaluation (or devaluation). 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 flow being paid in the non-convertible currency. You can schedule a meeting with our trading room. An expert market advisor will assist you in setting up your foreign exchange hedges on the New Taiwan Dollar (TWD).

To obtain accurate quotes on your New Taiwan Dollar (TWD) hedges, we invite you to contact our trading room.

Global Exchange Answers All Your Questions on Foreign Exchange Risk Coverage for Your New Taiwan Dollar (TWD) Operations

Are there minimum or maximum amounts for setting up hedges in New Taiwan Dollar (TWD)?

The maximum amount of hedges in New Taiwan Dollar (TWD) 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 less than 10,000 EUR (or equivalent in other currencies).

What is the maximum possible maturity for hedges in New Taiwan Dollar (TWD)?

Generally, we do not offer hedges in New Taiwan Dollar (TWD) for maturities exceeding 24 months, but this can be reviewed on a case-by-case basis. Please contact our trading room for a personalized assessment of your needs.

What are the setup fees for foreign exchange risk hedges in New Taiwan Dollar (TWD)?

All fees related to setting up hedges in New Taiwan Dollar (TWD) are included in the exchange rate communicated to you before the validation of your operation. The hedging is done by phone with a trading room operator. No fees are applied to the use of your hedges.

Is a security deposit required to take a hedge in New Taiwan Dollar (TWD)?

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 security deposit. Depending on your line conditions, margin calls may be triggered on your New Taiwan Dollar (TWD) hedging contracts if the EUR/TWD 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 New Taiwan Dollar (TWD) 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 New Taiwan Dollar (TWD)?
The current interest rate on the New Taiwan Dollar (TWD) is "Currency Rate".

Are there carry points or discount points on NDF contracts in New Taiwan Dollar (TWD)?

It all depends on whether you are a buyer or seller of New Taiwan Dollar (TWD) and against which currency you are trading the New Taiwan Dollar. Taking an example against the euro: If you are a buyer of New Taiwan Dollar (TWD) against the EUR, then there are 0 points because the interest rate of the New Taiwan Dollar (TWD) is égal to that of the EUR. Conversely, if you are a seller of New Taiwan Dollar (TWD) against the EUR, then there are 0 points.

YOUR HEDGING NEED IN TWD
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