Hedging Foreign Exchange Risk in USD - United States Dollar
The Foreign Exchange Risk in United States Dollar (USD)
When conducting transactions with the United States, you may need to send payments or receive payments in United States Dollar. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in USD and the time you collect the USD or conversely between the time your supplier issues their invoice in USD and you settle this invoice in USD, the EUR/USD rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/USD rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/USD. By locking in the EUR/USD rate in advance, you gain better visibility on your future cash flows in United States Dollar (USD) and secure your EUR/USD budget rate.
Hedging Foreign Exchange Risk on the United States Dollar (USD) with Mondial Change
Mondial Change allows you to hedge your foreign exchange risk on the United States Dollar (USD). Hedging foreign exchange risk on the United States Dollar can be done through fixed forward contracts or flexible forward contracts. It is also possible to hedge the risk on USD using currency options. You can use our hedging assistance tool which will help you select the most suitable hedging strategy for your needs. You can also schedule a consultation with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the United States Dollar (USD).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in United States Dollar (USD)
Are there minimum or maximum amounts for setting up hedges in United States Dollar (USD)?
The maximum amount of hedges in United States Dollar (USD) 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 United States Dollar (USD)?
Generally, we do not offer hedges in United States Dollar (USD) 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 hedges against foreign exchange risk in United States Dollar (USD)?
All fees related to setting up hedges in United States Dollar (USD) 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 security deposit required to take a hedge in United States Dollar (USD)?
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 United States Dollar (USD) if the EUR/USD 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 United States Dollar (USD) 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 United States Dollar (USD)?
No minimum amount for drawdowns on your flexible forward contracts in United States Dollar (USD). You can draw autonomously on the online platform as many times as you wish between the contract initiation and the maturity date of your forward contract in United States Dollar (USD).
What happens if at the maturity of my forward contract in United States Dollar (USD) 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. Or you can ask Mondial Change to extend your United States Dollar (USD) contract by a few months to give you time to use it. Mondial Change and its partners, however, reserve the right not to accept postponing the contract maturity date.
What is the current interest rate on the United States Dollar (USD)?
The current interest rate on the United States Dollar (USD) is "Currency Rate".
Are there carry points or discount points on forward contracts in United States Dollar (USD)?
It all depends on whether you are a buyer or seller of United States Dollar (USD) and against which currency you are trading the United States Dollar. If we take an example against the euro: If you are a buyer of United States Dollar (USD) against the EUR, then there are report points because the interest rate of the United States Dollar (USD) is supérieur to that of the EUR. Conversely, if you are a seller of United States Dollar (USD) against the EUR, then there are déport points.