The achievement of more favourable exchange rates than the predetermined budget rate, resulting in improved financial performance relative to original planning assumptions. Outperformance can result from skilled timing of hedging transactions, favourable market movements, or sophisticated hedging strategies that capture upside potential whilst maintaining downside protection.

For example, a Europe-based company with purchases in PLN achieved 2.1% outperformance on EUR-PLN through a combination of conditional orders (covering 59.2% of exposure) and micro-hedging of firm orders (covering 40.8% of exposure). Similarly, their GBP-EUR operations achieved 2.8% outperformance with 31.4% hedged through conditional orders and 68.6% through micro-hedging firm sales.

This outperformance occurs because firm orders are only hedged when market rates are more favourable than the budget rate - otherwise, protective stop-loss orders would have been triggered first. Measuring outperformance helps evaluate hedging programme effectiveness and identify improvement opportunities. Flexible and market-based hedging programs allow managers to systematically protect/outperform FX budget rates—whatever the economic scenario.

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