Category

FX

FXRisk ManagementTalking Shop
September 9, 2021

Talking Shop: Measuring Counterparty Exposure on Outstanding Trades

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected] Member question: “For companies that trade derivatives on a non-collateralized basis, how do you measure your exposure to counterparties on outstanding trades (e.g., impact from one standard deviation movement?) and how is this factored into your overall counterparty risk assessment? “We are currently looking to move away from collateral postings on our…
Justin Jones
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FXTalking Shop
August 19, 2021

Talking Shop: Approval Level For Executing Hedging Contracts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected] Member question: “I know we talked about this at some point this year, but I wanted to see if you all would help me benchmark. What level of approval/review/sign-off is required prior to executing your hedging contracts?” Peer answer 1: “Our treasurer signs off on each monthly tranche of cash flow hedges…
Justin Jones
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FXTalking Shop
August 12, 2021

Talking Shop: Digging Into Dual-Purpose Hedges and De-designation

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected] Member question: “Does anyone have dual-purpose hedges (for example, the hedge is originally a cash flow (CF) hedge and then intentionally de-designated to become a balance sheet hedge, with impact after de-designation going to the P&L)?”Peer answer 1: “Yes, we’ve recently switched to a long haul approach and are now de-designating our…
Justin Jones
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FXRegional
July 29, 2021

RMB vs. USD: Watching Closely as China Builds ‘Parallel Universes’

Standard Chartered advises keeping an eye on China as accelerating use of the RMB helps the nation separate itself from the pack.In a recent meeting of NeuGroup for Tech Treasurers centered around China’s economy, Standard Chartered’s global head of research Eric Robertsen kicked things off with an anecdote. Just over ten years ago, a Congo-based wood supplier had its supply of wood bought out by a Chinese business that paid in USD. Just three years later, Chinese businesses were still…
Justin Jones
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BankingCapital MarketsFX
July 22, 2021

Ripple Effects: Gauging Inflation’s Impact on US Rates and Economy

Despite increasing inflation, interest rates should remain low until late 2023, UMB bank tells assistant treasurers. Economic growth turned negative at the start of the pandemic but is rebounding strongly as the United States advances through what some call the Great Rotation—major changes that Eric Kelley, executive VP and director of research and fixed income for UMB Bank, said should result in a strong reopening over the next 12 to 24 months. UMB Bank is a large regional bank serving mainly…
Antony Michels
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FXRegionalRisk Management
July 1, 2021

The Option to Use Options: Hedging FX Risk in Emerging Markets

FX risk managers rely on flexibility at a multinational that wants to participate in beneficial currency moves. The ability to use options is essential for an FX risk manager at one NeuGroup member whose company wants to participate in favorable currency moves when hedging exposures in emerging markets. He described the company’s approach at a spring meeting sponsored by HSBC. The bank cited research showing that “the incentive to hedge EM risk has increased over the past 10 years” and “bouts…
Justin Jones
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FXTalking Shop
June 24, 2021

Talking Shop: Allocating Transaction FX Impacts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected] Member question: “As it relates to the reporting of transaction FX impacts (revaluation of non-functional currency monetary assets and liabilities—cash, AR, AP, etc.), does your company allocate these impacts to the business or is that impact kept at corporate?”Peer answer: “We’ve discussed this a lot recently. Historically, the FX gain/loss is kept…
Justin Jones
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FXRegionalRisk Management
June 10, 2021

Rescue Mission: Saving Trapped Cash in Depreciating Currency Markets

For projects in volatile economies, creative thinking from treasury could be critical.Profit is not a profit until it’s back in the US. That reality for many multinationals formed the backdrop at a recent NeuGroup meeting for treasurers of large-cap companies where members shared their approaches on how to react when a country’s economic environment takes a problematic turn. Emerging market nations including Argentina, Turkey and Brazil dominated the conversation, as their currencies carry risk of intense devaluation, exacerbating regulatory rules that can trap…
Justin Jones
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BankingFX
June 3, 2021

Looking at How Banks Look at You: Revolvers, Fees and Wallet Share

Treasurers seeking clarity on bank fees and product profitability get insights from Chatham Financial and NeuGroup.At a recent meeting of NeuGroup for Large-Cap Treasurers, members compared notes on revolving credit facilities, bank groups and share of wallet issues, including which products produce the greatest return for banks. A survey taken before the meeting revealed that despite market volatility last year that could have convinced corporates to replace some banks, most members did not see the size or composition of their…
Justin Jones
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FXTalking Shop
May 27, 2021

Talking Shop: The Calendar, the Clock and FX Accounting Rates

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected] Member question: “When do you set your monthly accounting FX rates? Our fiscal month always ends on Friday, end of day. We set our month-end rates on Thursday at 5 p.m. EST. Alternatives include: “Setting FX rates on Friday morning, but intraday historical data is limited in time, which limits auditability.“Setting FX…
Justin Jones
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