The strategic division of forecasted foreign exchange exposure into distinct segments or portions, each governed by its own specific hedging parameters and execution criteria. This segmentation approach allows for more flexible and responsive risk management, enabling treasury teams to apply different hedging strategies to different portions of their exposure based on market conditions, timing requirements, or risk tolerance levels.

A widespread misconception regarding layered FX hedging programs is that they should conform to a 20% - 60% - 80% - 100% quarterly schedule for the hedge ratio. Rather than best practices, this approach reflects managers' doubts about forecast accuracy. 

Currency Management Automation makes it possible for treasury managers to choose from a wide range of solutions tailored to different goals and/or constraints. The table below displays some of the main possibilities. Adding partitions to the layered FX program allows treasury teams to take advantage of favourable moves in currency markets by increasing the length of the program and/or increasing the hedge ratio for near-term exposure.

This is accomplished by applying different partitions to the hedging program. The software solution monitors FX markets 24/7 to automatically increase hedge duration or hedge ratios when currency markets move in a favourable direction.

‍