Risk Management on Forwards & Options

Despite best laid out plans, external factors like currency risk can take an MSME out of business.

Profit Margins in business have a priority order in terms of deployment. Hedging needs to be done till the reliability threshold. An adverse movement in currency should not jeopardise at least the maintenance capital expenditure (Machine maintenance / People rehires).

A Safety net is the closest physical example, having one and not needing it is the best outcome.

  • It cannot be insignificantly small that it does not serve its purpose.
  • Losing money on the hedge position should always be a better outcome for your firm.
  • Keep it as the cost of running your business. Volatility of 20-30% can erase a business permanently.

Our Hedge Policy and Execution Services help you mitigate these kinds of currency risks in your business. We begin by preparing a Hedge Policy for your firm and obtaining approval from your board.

Once approved, our team executes Yosaney’s Proprietary Value at Risk based hedging strategy to mitigate the currency risk. Our monthly strategy report is across

Financial Performance

A simple accounting view. Report the difference between the price at which you have booked a forward, and the price at which you have/would have converted at a cash-spot.

Risk Analytics Monitoring

A Value at risk view. A view of volume through forwards and volume not yet covered over the next 12 months. Evaluate the planned expenses over the next 12 months to find value at risk.

Stress test scenario

A ‘what if’ view. Assemble 3 scenarios each for the currency appreciating and depreciating. At 7 price points (incl current rate), simulating your Cash flows and P&L to see where the firm stands in each scenario.

At Yosaney, we are committed to providing you with the highest level of service and support. Contact us today to learn more about how our Hedge Policy and Execution Services can benefit your business.

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