Hedge Foreign Exchange Risk in LKR - Sri Lankan Rupee
The Foreign Exchange Risk in Sri Lankan Rupee (LKR)
When conducting transactions with Sri Lanka, you may need to send or receive payments in Sri Lankan Rupee. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in LKR and the time you collect the LKR or conversely between the time your supplier issues their invoice in LKR and you settle this invoice in LKR, the EUR/LKR rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/LKR rate movement (assuming your accounting currency is EUR) over a determined period that you can set up hedges on the EUR/LKR. By locking in the EUR/LKR rate in advance, you effectively gain better visibility on your future cash flows in Sri Lankan Rupee (LKR) and secure your EUR/LKR budget rate.
Foreign Exchange Risk Coverage on Sri Lankan Rupee (LKR) with Mondial Change
Mondial Change allows you to hedge your foreign exchange risk on the Sri Lankan Rupee (LKR). The foreign exchange risk coverage on the Sri Lankan Rupee can be done through fixed forward contracts or flexible forward contracts. You can schedule a meeting with our trading desk. An expert market advisor will assist you in setting up your currency hedges on the Sri Lankan Rupee (LKR).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Coverage for Your Operations in Sri Lankan Rupee (LKR)
Are there minimum or maximum amounts for setting up hedges in Sri Lankan Rupee (LKR)?
The maximum amount of hedges in Sri Lankan Rupee (LKR) 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 Sri Lankan Rupee (LKR)?
Generally, we do not offer hedges in Sri Lankan Rupee (LKR) 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 Sri Lankan Rupee (LKR)?
All fees related to setting up hedges in Sri Lankan Rupee (LKR) are included in the exchange rate communicated to you before the validation of your transaction. The hedge is taken over the 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 Sri Lankan Rupee (LKR)?
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 Sri Lankan Rupee (LKR) hedging contracts if the EUR/LKR 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 Sri Lankan Rupee (LKR) contracts open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.
Are there minimum amounts for early drawdowns on flexible forward contracts in Sri Lankan Rupee (LKR)?
No minimum amount for drawdowns on your flexible forward contracts in Sri Lankan Rupee (LKR). You can draw down autonomously on the online platform as many times as you wish between the contract initiation and the maturity date of your forward contract in Sri Lankan Rupee (LKR).
What happens if at the maturity of my forward contract in Sri Lankan Rupee (LKR) 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 Sri Lankan Rupee (LKR) contract by a few months to give you time to use it. Mondial Change and its partners reserve the right not to accept postponing the contract's maturity date.
What is the current interest rate on the Sri Lankan Rupee (LKR)?
The current interest rate on the Sri Lankan Rupee (LKR) is "Currency Rate".
Are there carry points or discount points on forward contracts in Sri Lankan Rupee (LKR)?
It all depends on whether you are a buyer or seller of Sri Lankan Rupee (LKR) and against which currency you are trading the Sri Lankan Rupee. If we take an example against the euro: If you are a buyer of Sri Lankan Rupee (LKR) against the EUR, then there are report points because the interest rate of the Sri Lankan Rupee (LKR) is supérieur to that of the EUR. Conversely, if you are a seller of Sri Lankan Rupee (LKR) against the EUR, then there are déport points.