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Covering Foreign Exchange Risk in TZS - Tanzanian Shilling

Drapeau Covering Foreign Exchange Risk in TZS - Tanzanian Shilling

The Foreign Exchange Risk in Tanzanian Shilling (TZS)

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

Foreign Exchange Risk Coverage on Tanzanian Shilling (TZS) with Mondial Change

Mondial Change allows you to cover your foreign exchange risk on Tanzanian Shilling (TZS). The foreign exchange risk coverage on Tanzanian Shilling can currently 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 cover your foreign exchange risk without any cash flow being exchanged 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 foreign exchange hedges on Tanzanian Shilling (TZS).

To obtain accurate quotes on your Tanzanian Shilling (TZS) hedges, we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Coverage for Your Tanzanian Shilling (TZS) Operations

Are there minimum or maximum amounts for setting up hedges in Tanzanian Shilling (TZS)?

The maximum amount of hedges in Tanzanian Shilling (TZS) 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 Tanzanian Shilling (TZS)?

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

What are the setup fees for hedges against foreign exchange risk in Tanzanian Shilling (TZS)?

All fees related to setting up hedges in Tanzanian Shilling (TZS) are included in the exchange rate communicated to you before the validation of your operation. The hedge is taken 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 Tanzanian Shilling (TZS)?

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 Tanzanian Shilling (TZS) hedging contracts if the EUR/TZS 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 Tanzanian Shilling (TZS) contracts open. Based on the review of your financial statements, lines without margin calls may sometimes be granted.

What is the current interest rate on Tanzanian Shilling (TZS)?
The current interest rate on Tanzanian Shilling (TZS) is "Currency Rate".

Are there carry points or discount points on NDF contracts in Tanzanian Shilling (TZS)?

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

YOUR HEDGING NEED IN TZS
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