FX Risk and Hedging Currency Risk

FX Currency Risk Management in the UAE

At C FOR U, we offer a range of services to help businesses manage their currency risk and hedge against potential losses. In the context of a business, currency risk refers to the potential financial losses that may arise due to fluctuations in foreign exchange rates, also known as FX risk.‍

FX Risk Management

FX risk management involves identifying and assessing the potential risks to your business from currency fluctuations, and implementing strategies to minimize these risks. These risks typically relate to purchases or revenues in a foreign currency. For example if a business has a 10% profit margin for it's goods and the currency rate on an order worsens by 3% then they lose 30% if their profit margin (3% from 10%). With the many tools available these kind of losses should be reduced. We offer expert advice and guidance on various FX risk management strategies, including hedging, to limit the impact of such currency moves.‍

Currency Hedging

Currency hedging is a common strategy used to protect businesses from potential losses due to adverse currency movements or FX risk. Essentially, hedging allows a business to lock in an agreed rate of exchange for a determined amount of currency to be purchased within a specific timeframe i.e. on EURAED, locking in a rate of 4.1 for 3 months to satisfy the purchasing cycle of goods.‍

How to Hedge Currency Risk

We can help you to determine the most appropriate currency hedging strategies for your business, based on your unique needs and circumstances. We set out to use products that you really need, not products that over complicate the strategy and its objectives. Our team of experts can provide guidance on everything from risk assessment to how to hedge currency risk, the products available, hedging strategies, market analysis, and compliance requirements.‍

Managing Currency Risk for SMEs

For SMEs, managing currency risk can be particularly challenging, as they may have limited resources and expertise in this area. Our advisors work as an extension of a businesses team and help to fill in the gaps in understanding and know-how to achieve the agreed strategy. This comes in the form of training and the creation of hedging policies that can be followed once our work has been done. With that being said, we want to make ourselves available to a business, whether that is for small tasks or large ones. The currency market changes rapidly and how a business deals with it has to too.

If you would like to star the process of securing your business against what might happen tomorrow then get in touch with us and we can arrange an initial call.