The financial risk associated with foreign exchange is called foreign exchange risk or currency risk. It is also called FX risk or exchange rate risk. The value of investment changes with the change in currency rate. The exposure to forex risk can affect organizations, big or small as it affects the assets and liabilities and hence the overall profitability. This also includes risk an investor would face while trading in the forex market, if there are open positions – long or short due to adverse exchange rate movement. With the forex market being a global one and functioning 24 hours – 5 days a week, this is likely to continue due to the socio-economic uncertainty. Thus to contain these fluctuations, one requires the forex advisory services.
The different types of risk associated with foreign exchange can be divided into transactional, translational or economic risk. These broadly refer to
A well managed FX risk management policy would help the organization to mitigate such risks and not hurt the company’s revenue numbers. This is done by adopting hedging strategies to reduce the effect on the corporate cash flows. The spot, forward and options contracts aid in understanding the hedging tool which would be best for the corporate.
The forex advisory services provide access to real-time currency rate information to the client in order to ensure transparent transactions when the client exchanges their receivables or payables with the banks. Many a times, the bank charges a margin over and above the currency rates. When there is no cross-check of real-time rates, the banks generally tend to quote a price in favor of the bank thus levying an extra margin to the client.
Apart from giving information through RateCheck, Myforexeye forex services also include RateAudit, foreign exchange risk advisory (FRA), transaction forex risk advisory (TFRA), transaction process outsourcing (TPO), corporate training services, etc. For retail clients, we even offer the money changing facility or money transfer services. They can travel for education or pleasure or medical needs and can choose to travel with a multi-currency forex card which is chip and pin protected.
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29 Jun 2020 05:35 PM
Dynamic hedging is a foreign exchange risk management strategy that allows businesses and individuals to readapt their hedging positions to evolving market conditions by providing flexible solutions to protect investments from exchange rate risks.
19 Jun 2020 05:01 PM
Management of Currency Exchange Risk is of paramount importance during turbulent times, like this pandemic. The currency fluctuations are very volatile and cannot be predicted as the circumstances are uncertain.
06 Jun 2020 03:59 PM
Outrights, in FX markets refer to the type of transactions where two parties agree to buy or sell a given amount of currency at a predetermined rate, on a specified date in future.
08 May 2020 05:21 PM
Converting one exchange rate into another at a particular price makes transferring rates. Ideally all nations should be treated as equal and there shouldn’t be any exchange rate applicable which would mean to have a universal currency.
24 Apr 2020 03:08 PM
Managing risk in a financial market is required to keep a check on the adverse movements in the instrument of the market. Particularly in the foreign exchange market.
10 Apr 2020 06:12 PM
So was India’s decision on locking down the country for 21 days required? The implication on the economic growth or rather slowdown has only made many doubt the timing and preparedness of the decision.