Glossar
Navigieren Sie mit unserem umfassenden Wörterbuch mit Finanzbegriffen und Definitionen durch die komplexe Welt des Währungsmanagements.
Exotische Währungen sind Währungen, die kaum gehandelt werden und sehr illiquide sind. Die meisten exotischen Währungen sind die Währungen der Schwellenländer. Dazu gehören unter anderem der armenische Dram (AMD), der Weißrussische Rubel (BYR), das ägyptische Pfund (EGP), die indonesische Rupiah (IDR), der marokkanische Dirham (MAD), der Katar-Riyal (QAR), der usbekische Som (IZS) usw.. Bei der Absicherung ihres Devisenrisikos zögern Risikomanager naturgemäß, exotische Währungen zu verkaufen, die aufgrund ihrer hohen Zinssätze mit einem Terminabschlag gehandelt werden. Dies ist jedoch kontraproduktiv. Währungen mit hohen Transportkosten sind in der Regel sehr volatil, und die Weigerung, sich abzusichern, kann zu schweren Verlusten führen. Die Lösung besteht darin, einen gewichteten Durchschnittszinssatz für alle einzelnen Risikopositionen zu berechnen und eine „Toleranz“ (in%) um diesen Referenzzinssatz herum aufzubauen. Anschließend werden „Take-Profit“ - und „Stop-Loss“ -Orders festgelegt, die es dem Unternehmen ermöglichen, die Ausführung der Geschäfte effektiv hinauszuzögern und so Absicherungen mit kürzerer Laufzeit einzugehen, die zu Einsparungen im Carry führen.
An early draw involves exchanging a portion of the total amount specified in a flexible FX forward contract before the expiration of the contract.The period in which the contract holder can activate early draws, for example three months, is established in the contract terms. Flexible forward contracts are an effective method of hedging against currency risk, and allow the contract holder to make regular payments using the same exchange rate for a specific time period. They can therefore be useful for companies that make regular payments to an overseas supplier.
ECB exchange rates are a set of daily foreign exchange rates, published by the European Central Bank (ECB), that are used as reference by companies and other participants in FX markets. The reference rates are usually updated around 16:00 CET on every working day on the ECB website. ECB exchange rates are based on a regular daily concertation procedure between central banks across Europe, which normally takes place at 14:15 CET. All currencies are quoted against the euro, the base currency. ECB exchange rates are published for information purposes only. They are often used for the annual financial statements of corporations, tax returns, statistical reports and economic analyses.
The economic calendar is a schedule of the most relevant economic events followed by investors. These events often have a significant impact on the financial markets and currency volatility.Foreign exchange markets are most affected by monetary and fiscal policy announcements, as well as by financial reports. A currency calendar allows investors to know what is going to happen when.Some of the most important events for the currency market include the US non-farm payroll reports, inflation figures and changes in interest rates. Investors also scrutinise central bank meetings and statements for even slight indicators of impending monetary policy.
Economic exposure to foreign exchange risk is the extent to which the present value of a firm’s expected future cash flows is affected by exchange rate changes. Economic exposure comprises two cash flow exposures: transaction exposure and operating exposure. Transaction exposure reflects future FX-denominated cash flows that result from already existing, contractually binding, sales or purchase orders (SO/PO), whether or not the corresponding receivables/payables have been created. Operating exposure measures the extent to which currency fluctuations alter the firm’s future operating cash flows, that is, its future revenues and costs. Operating exposure may arise even in a firm with cash flows denominated solely in its home currency, if its costs and/or price competitiveness are affected by FX fluctuations.
Economic exposure management is the set of hedging programs, pricing strategies and other measures taken by companies to protect themselves from the effects of adverse currency fluctuations. Economic exposure comprises two cash flow exposures: transaction exposure and operating exposure. Transaction exposure can be managed by implementing the adequate hedging program or combination of hedging programs. The details of each program vary according to the pricing dynamics, the weight of FX in the business, the location of competitors, and the situation in terms of forward points. Operating exposure can be managed by adjusting the firm’s market selection, pricing policy and product mix. With the appropriate hedging programs, many firms have the opportunity to ‘embrace currencies’ —buying and selling in the currency of their suppliers and clients—, thus expanding market share while protecting profit margins.
Economic Value Added (EVA) is an economic performance metric that results from comparing a firm’s return on capital ROC with its cost of capital r. In its simplest version, the formula is: EVA = (ROC - r) x Total capital When a firm’s return on capital exceeds its cost, the performance is satisfactory from investors’s point of view. Currency management can affect EVA in a variety of ways. ROC can be enhanced by buying and selling in foreign currencies, while a solid risk management process could lead —everything else remaining equal— and to a lower r. Both impacts would create more Economic Value Added.
Hedging relationship effectiveness is a concept introduced by the hedge accounting standards, referring to the extent to which changes in the fair value of a hedged item are offset by opposite changes in the fair value of the financial derivative instrument intended to hedge it. An effective hedging relationship is one of the main requirements of the different standards for hedge accounting. Under hedge accounting, an effective hedging relationships need to meet three conditions: Economic relationship. There must be an inverse relationship between the change in the value of the hedged item and the change in the value of the hedging instrument. Credit risk. Changes in the credit risk of the hedging instrument or hedged item should not be large enough as to dominate the value changes associated with the economic relationship. Hedge ratio. The appropriate hedge ratio should be maintained throughout the life of the hedge.
Enterprise currency management is a software category that comprises a wide range of solutions designed to automate different aspects of a firm’s currency management. Included in this automation process is the ‘FX Workflow’ framework, i.e. the procedures involved in the pre-trade, trade and post-trade phases of FX hedging. The vast majority of Enterprise currency management solutions are provided by the Fintech industry. The common denominator of all these solutions is that they leverage technology to make currency management simpler and more efficient.
As a result of the sharp reduction in bank lending to companies after the Global Financial Crisis, equity crowdfunding has been the solution for many budding start-ups, providing much needed capital in exchange for equity. Equitynet and FundedByMe are but two examples.
An exchange rate is the price of one country’s currency in terms of another currency, often known as the reference currency. For example, EUR-USD = 1.25 expresses the number of U.S. dollars that one euro will buy. In this example, EUR is the base currency. The same exchange rate, however, can be expressed as USD-EUR = 0.80, showing the number of euros that one dollar will buy. In this case, USD is the base currency. Exchange rates can be for spot or forward delivery. A spot rate is the price at which a currency is traded for delivery in 48 hours, while the forward rate is the price at which FX is quoted for delivery at a specified future date. Exchange rates are determined by the interplay of demand and supply forces in the foreign exchange market, an electronically linked network of banks and FX dealers whose function is to bring together buyers and sellers of foreign exchange.