5 things every leader should know about currency hedging

Lucia Maxim, 11 Feb 2010

Romanian version

Currency hedging is an approach that is intended to protect companies and institutions’ revenues and expenses from the risk incurred by any shifts in the value of currency used in the investment scheme. In order to explain what currency hedging consists in and how it can influence a company’s balance, Wall-Street interviewed specialists in the field and compiled a list of five most important things every leader should know about currency hedging.

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4. Who uses currency hedging vehicles?

“Currency hedging is usually an approach employed by companies with currency exposure generated by international investment schemes, such as export-import, financial transactions (fx credit, and payments in lei), dividend payout to parent company and payment in lei for raw materials carried at the rate of exchange set by the National Bank of Romania”, said Cosmin Bucur, VP Corporate RBS Romania.

Not all managers see a risk in the operations they carry, Iulian Lupu continued, but if they have a risk aversion, this fear should reflect in their decision to use currency hedging vehicles.

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