tradingroomroma03

facebook
twitter

Trading Room Roma

Sede: Via Paolo Mercuri, 11-13

00193 - Roma

Messaggio pubblicitario con finalità promozionale. Fare trading comporta dei rischi. I CFD sono strumenti complessi ad alto rischio di perdita di capitale dovuto alla leva. 74% di conti di investitori al dettaglio perdono denaro a causa delle negoziazioni in CFD con questo fornitore. Valuta se puoi permetterti di correre l’elevato rischio di perdere il tuo denaro

eurusd_2023-07-20_12-14-54_484c1

EUR/USD. Currency hedging with minimal effort 

July 20, 2023

A recent report of Société Générale highlighted that since 2003, EUR/USD volatility has increased in August in 75% of the years.

 

For a European company that exports goods and receives a payment in US dollars this increase in volatility could create foreign exchange losses. If the company is aware of the currency risks and why they are not worth taking, it can decide to hedge them.

 

It is important for the manager understands the average rate at which the exports have taken place, so called “weighted average exchange rate” (WAER). Then the exporter can define a channel that represent the level of risk tolerance to the eur/usd swing movement, when the spot price moving outside a defined support or resistance level, the automatic execution of hedge (forward, cfd, option, swap) will trigger with buy or sell limit orders.

 

By choosing this methodology, the company can minimize currency risk in an easy and efficient manner and reducing the cost of hedging.

 

Author: Edoardo Liuni