“Layered Hedging Strategy”

definition

Layered Hedging strategy is a risk management procedure designed to increase flexibility by hedging companies’ future currency exposure using products with different start and maturity dates instead of a one-off hedging product covering the whole year’s forecast exposure.

Companies using this approach gain two major advantages. They can calculate the FX earnings to be hedged more accurately and enjoy greater flexibility. These advantages allow them to profit from market movements in their favour, which generates better average forward prices in the long term.

Read our Layered Hedges entry to discover more.