FX hedging instructions

Exchange rates often fluctuate heavily. For example, in recent years, the exchange rate between the EUR and the USD has changed an average of 9% in six months. At most, the change over a six-month period has been as much as 20%. Variations this high may have a material negative impact on the earnings of a company engaging in foreign trade.

FX rate movements affect companies in many different ways. FX rate movements cause variation in

  • the euro value of the company’s receivables and payments in foreign currencies
  • the value of other balance sheet items, such as loans, in foreign currencies
  • the value of foreign assets, which causes variation in the company’s equity and thus has an impact on the equity ratio, for example.

 

See examples

Read the detailed FX hedging instructionsOpens new window with examples (in Finnish)PDF.

 

In focus FX hedging products In focus

FX risk

Does your company have income, expenses, liabilities or assets in a foreign currency?

FX fluctuations may cause significant variation in earnings, cash flows and the balance sheet, but there are many solutions to do hedging against such fluctuations.

Hedging solutions

Fluctuations of exchange rates in the FX markets generate an FX risk.

The risk is reflected as changes in the rates used in FX trades and in the value of loans and assets, for example. However, there are many ways to hedge FX risks.

Tailored FX hedges

A flexible cap or floor for FX rates, with or without a window

FX derivatives can be used for constructing hedging solutions tailored to the individual needs of companies.

FX hedging products

FX forward

For hedging income and expenses in a foreign currency

An FX forward fixes the rate used in a future FX trade, hedging the future cash flow against FX rate fluctuations.

Tailored FX hedges

A flexible cap or floor for FX rates, with or without a window

FX derivatives can be used for constructing hedging solutions tailored to the individual needs of companies.

Advice on bonds