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risk premium

The risk premium is the extra compensation —in terms of rates of return— required for holding assets that are considered riskier than AAA-rated government bonds. In FX markets, the risk premium is visible in the difference in interest rates between low-risk currencies such as USD, CFH and EUR, and riskier currencies such as TRY, BRL […]

rolling hedge

Rolling hedging is part of a ‘family’ of hedging programs in which the foreign-currency exposure for the current budget —divided into months or quarters— is forecasted and hedged partly (or entirely) during the previous budget period. The process is continuously updated, as the following year’s exposure is planned and hedged during the current year. The […]

rolling positions forward

Rolling positions forward refers to the extension of an FX forward contract. It is achieved by closing out a soon-to-expire contract and opening another one at the current market price for the same currency pair with a longer-dated maturity. The resulting gains or losses on the expiring forward are charged or refunded by the liquidity […]