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Insights, updates and learnings
Our GOAT blog: Calculating fx forward points
27/03/23
Our GOAT blog: Calculating fx forward points
Every year thousands of readers like you benefit from this common-sense approach to the calculation of foreign exchange (FX) forward points. First published 10 years ago, we regularly review and update the FX forward points content – this is the latest edition
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Quantifying bank counterparty credit spread inputs for CVA
22/09/21
Quantifying bank counterparty credit spread inputs for CVA
Clients often ask what the appropriate credit spread would be when calculating CVA (Credit Value Adjustment) under the current exposure method - we outline our recommended approach for Australia, NZ and UK based organisations.
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Hedge accounting FX options: time versus intrinsic value
23/08/21
Hedge accounting FX options: time versus intrinsic value
Learn how FX options lock in the certainty of worst case exchange rate outcomes while allowing participation in favourable rate movements.
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Why use an interest rate swap and how does it work?
26/07/21
Why use an interest rate swap and how does it work?
A popular blog first released in 2015, largely to help explain what an Interest Rate Swap or IRS is. Funnily enough – the need to know is just as great today, if not greater.
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17/02/16
FX hedging, not just for the “big boys”
We often encounter a common misconception among SME importers and exporters that the FX hedging market is the domain of the “big boys”. SME importers and exporters often believe that the use of financial instruments such as FX forwards and options are for “large” foreign currency costs and/or sales receipts....
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06/11/15
Six steps to better FX risk management
When it comes to business risks for manufacturers and exporters, time and again fx volatility comes out as the number one concern. FX risk management is seen as a murky world but it doesn’t have to be if you are disciplined about following these six steps. Step 1 – Identify...
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04/02/15
Hedge accounting has never been easier
It seems like a lifetime ago since hedge accounting was first introduced, nearly ten years ago now. My how auditors loved it. How complicated could they make it? Very, ,was the answer. How about insisting on regression testing for simple foreign exchange forward contracts or forcing options to be split...
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07/12/14
Credit spreads back to pre GFC levels
We have discussed CVA at length in our newsletter and blog as it is arguably the most significant change to the accounting standards, from a financial instruments valuation perspective, since hedge accounting was introduced. The standard relating to CVA, IFRS 13, was developed as a result of the Global Financial...
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03/08/14
Lies, damned lies and valuations
With the passing of 30 June we have entered another busy period for year-end valuations. One of the most common questions we are asked at these important balance dates is “why is there a difference between the bank valuation and the Hedgebook valuation (or any other system’s valuation for that...
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18/02/13
The Benefits of Hedging, and Managing FX Risk: Part 1
Many small- and medium-sized firms engaging in import and/or export activity tend not to hedge. The reasons not to hedge come in all shapes and sizes: it’s too complex; it’s too costly; there’s a misconception that it is speculation; or even that that firms don’t know about hedging tools and strategies available to them.
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11/02/13
Explaining Different Types of Exposure Risk
Importers and exporters alike face foreign exchange risk, or currency risk, when engaging in economic activity outside of their domestic currency. As explained in an earlier blog post, currency risk materializes for exporters when exchange rate volatility results in the company repatriating fewer revenues abroad, when the domestic currency strengthens relative to the foreign currency. For importers, this risk is the exact opposite: currency risk materializes when the domestic currency weakens relative to the foreign currency.
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21/01/13
An Introduction to Currency Risk for Importers and Exporters
Import and export companies face the daunting task of dealing with foreign exchange risk that can easily alter revenues from overseas; with smaller cash reserves, exchange rate fluctuations can be the difference between profits and losses.
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16/01/13
Hedging Basics: Currency Swaps
A currency swap locks in a price of a currency pair and is another tool that can be used to manage an organisation's cash flow. It pays the fixed-price buyer of a currency pair a payout equal to the difference between the current price and the settlement price of the swap.
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14/01/13
Hedging Basics: Average Price Currency Options
Movements between currency pairs can be swift and choppy. Using average price currency options can be a significant help in smoothing a corporation’s cash flows.
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04/12/12
Hedging Basics: A Currency Pair Risk Reversal
Learn about one of the most interesting strategies used by investors or treasurers to hedge their exposures to the currency markets: risk reversal.
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29/11/12
Hedging Basics: FX Hedging Using a Currency Put
Learn about one of the easiest and most effective ways to hedge a currency position, by purchasing a protective currency put.
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