Balance Sheet Hedging - GSNFX (2024)

Please kindly contact Jack Georgeson directly regarding all Balance Sheet Hedging Questions and Enquiries.

Phone: +44 (0) 203 854 6802

Email: jackgeorgeson@gsnfx.co.uk

Do you currently hedge balance sheet translational risk using FX risk management products?

Do you currently use a corporate bank or FX broker to manage balance sheet hedging?

Are you considering introducing balance sheet hedging to help protect the value of company or group assets and liabilities against FX volatility?

Please reach out to us by phone or email to discuss your specific needs.

Do you currently have balance sheet FX hedging in place with a bank or FX broker?

Are you considering introducing balance sheet hedging and discussing with your bank or FX brokers?

Are you aiming to maximise your credit terms and FX hedge pricing for balance sheet hedging products?

We are very happy to discuss your specific requirements and aim to add value in all aspects of your current or planned balance sheet hedging program.

Please kindly reach out to us by phone or email for an initial discussion.

Volatility and uncertainty in FX markets are key factors of the global marketplace and particularly relevant for the UK and sterling in recent years. Companies that do business internationally can manage translational accounting risks by using foreign exchange balance sheet hedging products, these include Forward Contracts and FX Options that can manage and hedge adverse impact of FX currency fluctuation. Balance sheet hedging allows companies and international groups to manage FX translational risks when reporting financial statements in their functional currency.

Common balance sheet hedging examples involve protecting the value of assets held in non-functional currencies. This can include fixed assets, debtors and receivables, liabilities both short-term and long-terms, and current assets such as cash holdings.

Balance Sheet hedging commonly uses Forward Contracts to secure the value of underlying non-functional assets and liabilities into the functional accounting currency.

Balance sheet hedging programmes help limit exposures and manage risks if FX Market fluctuations can have a material impact on the value of both assets and liabilities.

The most common strategy to protect balance sheet translational risk uses FX Forward Contracts. For many companies and corporate structures this strategy is often viewed as the most appropriate and also the simplest method to implement.

Some professional clients may opt for a more advanced and complex hedging strategy using FX Options. If you are considering using FX Options or if you are a professional clients and currently utilise Structured FX Products for balance sheet hedging, please kindly reach out to us in the first instance by phone or email.

We would first need to understand more about your specific needs and objectives before discussing specific derivative or option products. We work with professional clients only when implementing FX Options due to the nature of the products and additional complexities when compared to other simpler strategies.

A company that uses forward contracts is essentially fixing the exchange rate at which they buy or sell a pre-agreed amount of currency in the future. They are commonly used as an FX hedging tool due to the simple and often flexible nature of the product.

This is commonly a way to secure the value of balance sheet assets and liabilities by fixing the assets value into the functional accounting currency.

In some cases, balance sheet hedging contracts do not involve full settlement and delivery at maturity. For example, corporate groups may want to protect the value of balance sheet assets which will remain in non-functional currencies for extended on-going periods. These products are suitable for professional clients. In the first instance, please reach out to us by phone or email for a discussion. Based on appropriateness we can then discuss the mechanics of non-deliverable balance sheet hedging products.

FX risks are commonly relevant when conducting business internationally and operating in global markets. The key decision of whether to hedge and manage FX exposures will vary. The need to hedge will often be linked to how material an impact FX volatility can have on businesses and global corporate groups.

The objectives of FX risk management should be business certainty and protection. If you are considering introducing balance sheet hedging and have a variety of questions, please kindly reach out to us for a no obligation discussion.

If you are currently hedging balance sheet risk with a bank or FX broker and would like to discuss more favourable terms or alternative strategies. Please get in touch, we are very happy to discuss your exact needs, challenges, appropriateness and objectives.