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Hedge Foreign Exchange Risk in KRW - South Korean Won

Drapeau Hedge Foreign Exchange Risk in KRW - South Korean Won

Foreign Exchange Risk in South Korean Won (KRW)

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

Hedging Foreign Exchange Risk on South Korean Won (KRW) with Mondial Change

Mondial Change allows you to hedge your foreign exchange risk on the South Korean Won (KRW). Currently, hedging foreign exchange risk on the South Korean Won can 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. 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 transferred 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 currency hedges on the South Korean Won (KRW).

To obtain accurate quotes on your hedges in South Korean Won (KRW), we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in South Korean Won (KRW)

Are there minimum or maximum amounts for setting up hedges in South Korean Won (KRW)?

The maximum amount of hedges in South Korean Won (KRW) 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. 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 South Korean Won (KRW)?

Generally, we do not offer hedges in South Korean Won (KRW) 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 hedging against foreign exchange risk in South Korean Won (KRW)?

All fees related to setting up hedges in South Korean Won (KRW) are included in the exchange rate communicated to you before validating 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 South Korean Won (KRW)?

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 South Korean Won (KRW) if the EUR/KRW 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 contracts in South Korean Won (KRW) 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 South Korean Won (KRW)?
The current interest rate on the South Korean Won (KRW) is "Currency Rate".

Are there any forward points or discount points on NDF contracts in South Korean Won (KRW)?

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

YOUR HEDGING NEED IN KRW
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