In today’s increasingly interconnected and volatile markets, managing foreign exchange (FX) risk and exposure is a critical challenge for CFOs and treasury teams. Currency fluctuations, market volatility, and geopolitical risks are constant threats that can disrupt financial performance and expose organizations to significant losses. Treasury teams must efficiently balance risk and return while ensuring visibility […]
Hedge accounting is designed to reduce volatility caused by the mismatch between the timing of gains or losses in hedged items and their corresponding hedging instruments. If you align the financial reporting of both, companies will achieve a more accurate representation of where their finances are. Hedge accounting is an important facet of financial management—it […]
FX risk, or foreign exchange risk, is the exposure a company faces due to fluctuations in currency exchange rates. It arises when transactions occur in different currencies, impacting earnings and financial stability. Effective FX risk management is crucial for businesses engaging in international trade or having operations across borders. Unmanaged FX risk can lead to […]
To portray their businesses in the most favorable light to investors, many corporate organizations grapple with the question of whether to employ constant currency reporting. This approach can be divisive; while some staunchly advocate for it, others oppose it. However, many major global enterprises embrace constant currency reporting, recognizing its value as a tool that […]
With foreign functional subsidiaries, hedging net income is difficult to do. But here’s how it can be done with a proxy hedge.
In this blog, we explain three steps (with examples) to properly recording foreign currency transactions under ASC 830.
In this blog, we cover 4 difficult and problematic types of transactions that could be misrepresenting your earnings and hedge results – and how to fix them.
When left unaddressed, foreign currency risk can wreak havoc on your bottom line. But it doesn’t have to be this way. To keep foreign currency fluctuations under control and drive predictability in financial statements, many companies turn to FX hedge programs.
A hedge program is most effective when it aligns with the way your company evaluates financial performance. In this blog, we provide an overview of three different hedge strategy types that companies often turn to.
Volatility across currency, interest rate and commodity markets – plus regulatory and accounting standards updates – have market participants wondering what they can do to stabilize their operations. Here’s how to respond with hedging – no matter how the market turns.
Today, I’m going to be talking about objective setting. And when we’re talking about FX policies, a lot of times – almost universally, I guess – I see the objective in the policies to mitigate FX risk, and it’s not really clear what it is we’re communicating to the board of directors who is the […]
As companies implement and run foreign currency (FX) risk management programs, they need to be aware of some common mistakes. Not all treasuries will encounter every mistake, but they are sure to encounter at least one of these—if not now, then in the not-too-distant future.
Once a company establishes a balance sheet program, it likely runs on auto-pilot from then on. Exposures are gathered, forecasted, netted, hedged and adjusted inter-month, and the results of the program are reported — but rarely is there a “review” of the hedge program from top to bottom.
To implement a successful hedge program, it’s important that all parties involved know exactly what the hedge program will provide. This prevents disappointment and level sets expectations with management.
Using a Net Investment hedge strategy to boost income has been around for decades, but the ultra-low interest rate environment in Europe combined with the new rules under ASU 2017-12 has renewed curiosity in this approach.