In the Wall Street Journal, Amol Dhargalkar explains what tools corporate treasurers can use to hedge foreign currency in light of the strong U.S. dollar
“A knock-out transaction can be a hedge that goes away once the exchange rate rises to a certain level,” said Amol Dhargalkar, a managing partner at financial services firm Chatham Financial.The Wall Street Journal
There are a variety of tools that treasurers and other executives can use, ranging from forward contracts, which lock in the exchange rate for a purchase or sale of a currency on a future date; derivatives that give the right but not the obligation to exchange at a prearranged rate at a specified date, also called options; as well as instruments like knock-ins and knock-outs, which allow companies to seek the protection of a hedge only at certain exchange rates.
“A knock-out transaction can be a hedge that goes away once the exchange rate rises to a certain level,” said Amol Dhargalkar, a managing partner at financial services firm Chatham Financial.
Our expertise for corporates
Chatham provides the knowledge and expertise needed to manage the financial risk associated with interest rate, commodity, and foreign exchange volatility. We develop and implement hedging strategies for hundreds of public companies annually, based on deep and productive banking relationships, giving us market data and insights to enable you to secure the best pricing and terms. Our goal is to empower you to strengthen your financial position and support your company’s financial objectives.
With expertise across hedge accounting, regulatory compliance, valuations, and hedging transactions, we can support all aspects of financial risk management. Our ChathamDirect platform provides convenient workflow, robust analytics, and comprehensive accounting methodologies, supported by our unmatched commitment to client service. This unique combination of strategy, operations, and technology will empower you to run a best-in-class hedging program.
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