FX
September 30, 2022

To Hedge or Not to Hedge FX Exposures When Volatility Spikes

Pausing a hedging program risks undermining the perceived value of hedging by senior executives and the board. “Should we stop hedging?” The surge in the US dollar this year against other major currencies has prompted some FX risk management teams to ask that question as well as others about hedging strategy amid disruptive volatility, bankers at Wells Fargo said at a fall meeting for NeuGroup for Foreign Exchange sponsored by the bank. The questions come amid a big jump in…
FXTalking Shop
September 15, 2022

Talking Shop, FX Edition: EUR Forwards; Hedging Depreciation

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 1: “Going out to one year for EUR, what size tranches are you trading for EUR forwards? Could I trade $10 million-$20 million? $20 million-$30 million? Peer answer 1: “The one-year EUR forward is pretty liquid, but to keep the spread narrow, we typically keep our size under USD 30 million equivalent…
FXTalking ShopTechnology
August 11, 2022

Talking Shop: Benchmarking Cash Flow Hedging

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: “Here are some benchmarking questions about cash flow hedging: 1. “What percentage of cash flow exposures do you hedge?2. “What instruments do you use to hedge?3. “How far into the future do you hedge?4. “Given the current strength of the US dollar, are you contemplating changing your FX hedging program?” Peer answers, question 1 (hedge…
FXRegional
July 14, 2022

Righting the FX Hedging Ship After a Perfect Storm

Lessons learned and changes made after a plunge in JPY reveals cracks in communication and processes. The plunge of the Japanese yen (JPY) this year to its lowest level against the US dollar in more than two decades (see chart) revealed communication problems at one NeuGroup member company between FX risk managers in treasury and the sales team in Japan—problems that could have resulted in a painful financial outcome. Instead, the company’s treasurer came away with valuable lessons for any…
FX
July 14, 2022

Reducing FX Risk: The AtlasFX Vision

AtlasFX CFO Scott Bilter discusses the implications of a possible commodity bull market for FX risk managers in an interview with NeuGroup CEO Joseph Neu. Managing foreign exchange risk at multinational corporations is never easy. But it’s definitely harder during periods of market volatility and economic uncertainty—like the one roiling FX markets now. Among the recent challenges facing NeuGroup members who manage FX risk: The US dollar has soared against the euro and the Japanese yen as the Federal Reserve…
FXTalking Shop
May 26, 2022

Talking Shop: What Is Your Hedge Horizon?

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 Neugroup members with an FX cash flow hedging program, what is your hedge horizon? “For context, we hedge up to two years and we’re looking to revise that horizon (potentially up to three years) in our FX policy.“Last, what determines your hedge horizon (e.g., budget cycle, product development cycle, contracts,…
FXSenior Executive
May 5, 2022

Sharpen the Focus: Fostering More Productive FX Meetings

Approaches to more productive meetings include highlighting world events, more detailed program updates and updating dashboards. After a recent quarterly risk meeting, a senior leader gave this advice to one FX risk manager to improve the productivity of future meetings: Highlight only new developments and events, come with any specific asks and leave anything else to pre-meeting reading materials. Up to this point, much of the two-hour meetings consisted of a comprehensive update on everything the FX team had done…
FXSenior Executive
March 24, 2022

Turn Down the Volume: Cutting Through ‘Noise’ in FX Hedging

NeuGroup members share their common sources of unexpected volatility in cash flow and balance sheet hedging programs.One goal of a foreign exchange hedging program, one FX risk manager said at a recent NeuGroup meeting, is to minimize the risk that senior executives will face questions during quarterly earnings calls about the impact of currency on results. But uncertainty sparked by global issues like the war in Ukraine, inflation and fallout from the pandemic means this isn’t always possible. Those issues…
FXTechnology
March 17, 2022

Assembly Required: Closing Loops by Building Automations

One member, challenged to create a solution without external resources, automated FX processes through in-house ‘citizen developers.’While a TMS can offer an integrated treasury technology solution, no single system can support the full range of automation requirements. In the case of one fast-growing, high-tech NeuGroup member company, the deficits surfaced in the area of FX transaction management and reporting. Faced with a need to improve the process, shorten cycle time and reduce cost with no additional resources, the company decided to…
FXTalking Shop
January 12, 2022

Talking Shop: Hedging Cyclical Currencies

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 deciding on whether to hedge a currency, do you take into account whether the currency is cyclical or not? “I think that there is a stronger case to hedge a monetary asset in a cyclical currency, such as the Brazilian real (BRL), that tends to appreciate when the economy…