Hedging is a strategy that tries to limit risks in financial assets. Hedging is widely used to set foreign exchange risks, interest rate risks, commodity risks, among others. The most common ways of hedging are through derivatives, diversification, and trade-offs. With ABV Debt, get to know more about Hedging Advisory and services.
In theory, hedging is very simple, but in practice, it is not.
In the case of transactions involving foreign exchange, there is a risk of losses due to an unfavorable change in the exchange rate, which affects the importers, exporters of goods and services, and borrowers of foreign currency loans.
These losses/gains may have a long-term impact on the economic results of the business transactions, cash flows, and P & L, reflecting badly upon the various stakeholders of the company. To maintain the parity between cash flows and smoothen P & L risk, management must strategize their hedging policy.
The highly qualified team at ABV will help you determine whether or how much of your portfolio needs hedging, the potential costs, and benefits, as well as which financial instruments to use.
Price risk management, program review and development, implementation and testing the effectiveness of hedging, accounting and periodic financial review of hedging transactions, and providing training and education on hedging are some of the services we provide.
