Protect your business' bottom line

MONEYCORP NEW LOGO 450x125pixDealing with international suppliers in business can be an essential part of keeping your costs down, but if you lose out on exchange rates, it can have a direct impact on a company’s bottom line.

Currency rates can fluctuate in a short period of time and when they move against you, it could be a painful and costly experience. Fortunately, there are a number of ways that businesses can protect themselves through the services offered by the exchange expertsmoneycorp.Hedging your requirement can help to protect your business’ bottom line, reduce risk, and prevent the erosion of your profit margins. Fortunately,Moneycorp Financial Risk Management Limited – part of the moneycorp group –can work with your business to provide tailored solutions that are bespoke to your requirements. Two of their most popular regulated hedging products are forward extras and ratio forwards.

Forward extras can allow you to purchase currency at a more competitive rate than can be achieved by buying at spot. They provide a guaranteed ‘worstcase rate’ of exchange and also allows the opportunity for you to fullyparticipate in any positive exchange rate movements, providing a predetermined ‘barrier level’ has not been breached at any point during the life of the contract.

If the rate falls below the ‘worst case rate’, you have the right, but are not obliged, to purchase the full amount of currency at this rate. If the spot rate has traded above the ‘barrier level’, you are obliged to purchase the entire amount at the ‘worst case rate’. However, if the currency spot rate remains below the ‘barrier level’ and above the ‘worst case rate’, you would be entitled to purchase the full amount at the best case rate.

There is typically no premium payable to enter into this strategy and you may find the provision of a known ‘worst case rate’ helpful for budgetary purposes.

A ratio forward provides a markedly more favourable rate at which to deal a proportion of your contract amount – the ‘ratio amount’. This strategy does not provide a hedge for your full contract amount and the degree to which you can benefit in favourable exchange rate movements is capped. If the market is more favourable than the strike rate on the expiry date, you will be required to trade the full notional amount at the strike rate.

There is typically no premium payable to enter into this strategy and this regulated hedging product provides a markedly better rate than the prevailing forward rate, at which to purchase a known proportion of your contract amount.

moneycorp has 10 liquidity providers, allowing us to offer competitive live rates throughout the day. Each client is assigned a personal MSTA qualified dealer to monitor these rates and offer a proactive service to capitalise on market movements. We also have an extensive reporting suite, which helps our clients track their payments and monitor their foreign exchange transactions - as a SWIFT Tier 1 member we can send client funds quickly and conveniently.

Moneycorp Financial Risk Management Limited is authorised and regulated by the Financial Conduct Authority for the conduct of designated investment business.Foreign exchange options and other derivative products are not suitable for everyone and you should ensure you fully understand the risks involved before purchasing these products.

For more information, please call 020 7823 7400 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

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