If you are a borrower of money or have transactions with offshore counterparts then you will have exposure to Interest Rate and/or Foreign Exchange risk.
Developing, designing, implementing and managing risk management policies and solutions is often complex and involved. An effective risk management system can, and should, take up valuable resource time. Unless you have a dedicated Treasury resource in house who specialise in this area you are probably not giving this exposure the time it requires.
TAURUS will be able to assist you.
Borrowers of money expose themselves to interest rate risk. Their cost of funds fluctuates as interest rates fluctuate. If interest rates rise then the cost of funds increases and vice versa. It is the rise in costs that must be protected.
If you buy or sell goods and/or services to offshore counterparts your costs of goods bought or sold will fluctuate as the currency fluctuates.
Financial institutions sell interest rate and foreign exchange derivative or hedging products and solutions. These help companies manage their interest rate or foreign exchange risk. There are many different products and solutions available. The correct use of these is dependent upon many factors, some of which include:
The companies hedging policy;
The financial status of the company;
Financiers covenants;
The risk appetite of the company;
The amount of time invested in this risk;
The term and nature of the exposure;
The economic outlook for both the local and global markets;
The forward curve and market volatility; and
Other markets including commodity and share markets.
If the above financial situation is one you face then TAURUS will be able to assist you in developing and managing the appropriate hedging strategies.
Please see our services page for a more detailed description of what we can do for you.
The companies hedging policy;
