Covering Foreign Exchange Risk in RON - New Romanian Leu
The Foreign Exchange Risk in New Romanian Leu (RON)
When conducting transactions with Romania, you may need to send or receive payments in new Romanian leu. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in RON and the time you collect the RON or conversely between the time your supplier issues their invoice in RON and you settle this invoice in RON, the EUR/RON exchange rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/RON exchange rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/RON. By locking in the EUR/RON rate in advance, you gain better visibility on your future cash flows in new Romanian leu (RON) and secure your EUR/RON budget rate.
Foreign Exchange Risk Coverage on New Romanian Leu (RON) with Mondial Change
Mondial Change allows you to cover your foreign exchange risk on the new Romanian leu (RON). Foreign exchange risk coverage on the new Romanian leu can be achieved through fixed forward contracts or flexible forward contracts. It is also possible to cover the exchange risk on the RON 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 meeting with our trading desk. An expert market advisor will assist you in setting up your foreign exchange hedges on the new Romanian leu (RON).
Mondial Change Answers All Your Questions on Foreign Exchange Risk Coverage for Your Operations in New Romanian Leu (RON)
Are there minimum or maximum amounts to set up hedges in new Romanian leu (RON)?
The maximum amount of hedges in new Romanian leu (RON) 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 new Romanian leu (RON)?
Generally, we do not offer hedges in new Romanian leu (RON) 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 new Romanian leu (RON)?
All fees related to setting up hedges in new Romanian leu (RON) are included in the exchange rate communicated to you before the validation of 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 new Romanian leu (RON)?
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 new Romanian leu (RON) if the EUR/RON 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 new Romanian leu (RON) 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 new Romanian leu (RON)?
No minimum amount for drawdowns on your flexible forward contracts in new Romanian leu (RON). 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 new Romanian leu (RON).
What happens if at the maturity of my forward contract in new Romanian leu (RON) 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 contract in new Romanian leu (RON) by a few months to give you time to use it. Mondial Change and its partners reserve the right not to accept the postponement of the contract maturity date.
What is the current interest rate on the new Romanian leu (RON)?
The current interest rate on the new Romanian leu (RON) is "Currency Rate".
Are there carry points or discount points on forward contracts in new Romanian leu (RON)?
It all depends on whether you are a buyer or seller of new Romanian leu (RON) and against which currency you are trading the new Romanian leu. Taking an example against the euro: If you are a buyer of new Romanian leu (RON) against the EUR, then there are report points because the interest rate of the new Romanian leu (RON) is supérieur to that of the EUR. Conversely, if you are a seller of new Romanian leu (RON) against the EUR, then there are déport points.