Foreign Currency Risk Management

If not properly managed, currency risk presents exposure that can have severe financial consequences to an organization’s financial statements. It is not uncommon for companies with currency exposure to underestimate the financial impact of currency fluctuations on their business and miss the opportunity to develop a robust currency risk management strategy.

Even when currency expertise is available, organizations may oversimplify the complexities of the risk. Or, they simply lack the resources needed to properly manage the cash flow and balance sheet risk associated with foreign operations or investing abroad.

Since its earliest days, Chatham has been managing all facets of currency risk for our clients. We help them develop and execute strategies to understand and offset their exposures. Whether the risk is operational or driven by a transactional event, our expertise supports clients in two key ways: First, we develop strategies to mitigate currency risk from an economic, accounting and regulatory perspective. Secondly, we can successfully execute transactions at a fair price and properly manage all aspects of their trade. Our clients’ confidence is grounded in our:

Practitioner Expertise and Experience: Our practitioners have worked on nearly 100 different currencies. Our experience is not just theoretical but derived from practical experience in developing and executing hedging strategies for clients worldwide.

Benchmarking Perspective: Through working with hundreds of counterparty banks on tens of thousands of transactions, we have an unsurpassed benchmarking perspective in the industry. When sitting on our clients’ side of the table, we add scale, market perspective, and confidence in all aspects of currency risk management.

Scaled Processes: Our robust and scaled processes for all aspects of currency risk management include analyzing exposures and arranging bank credit while negotiating important completion of both pre-and- post trade documentation management from execution and accounting to reporting. Through our direct experience working and negotiating with nearly 200 financial entities, we can effectively and efficiently manage currency risk.

Sophisticated Modeling, Analytics & Robust Technology: Our modeling, analytics capabilities and proprietary technology can evaluate exposures and determine the strategy and instruments that best align with our client’s risk tolerance. With our in-house team of quants, analysts and proprietary technology platform, we analyze currency exposures and risks and develop automated scenario analysis. This ensures clients are minimizing their currency risk exposure.

Proven Execution: Executing tens of thousands of transactions every year through our competitive auction platform or direct bank negotiation, Chatham ensures fair terms and the best structure. We also make sure that every aspect of the trade is carefully managed, from meeting all reporting requirements and regulatory constraints and proper pre-and-post trade documentation to accounting for and valuing every hedging instrument.

Whether a company is seeking a broad currency risk management program or looking to execute an individual swap, Chatham’s expertise and experience translate into proven strategies and solutions for our clients.