FOREIGN EXCHANGE HEDGING

Forward Outrights and Windows

Tap into the expertise and insights of Associated Bank’s foreign exchange (FX) product specialist team. We will respond with a no-obligation assessment of your company’s individual FX risks and offer you strategies to help you determine the next steps. It’s that simple.

Most hedging of future foreign exchange exposure is accomplished via forward contracts, which are agreements to exchange one currency for another at an agreed-upon rate on some future date or date range.

Money does not change hands until the settlement date. Forward contracts protect against any adverse movement in exchange rates but don’t allow benefits from favorable movement. There are no explicit fees involved in FX contracts. Pricing is entirely contained in the buy/sell spread, which bears relationship to the customer’s transaction volume.

Foreign Currency Options

Vanilla options protect against any adverse movement in exchange rates. With the addition of an up-front premium, they allow the holder to benefit dollar-for-dollar from any favorable movement. Structured options offer the same protection against adverse movements but, in exchange for reducing or eliminating the cost, limit the extent the holder can benefit from any favorable movement

Non-Deliverable Forwards and Options

Trust us to navigate the sometimes-difficult conversions in countries with restricted currency. These countries restrict the convertibility of their currencies, requiring that cross-border transactions are settled in U.S. dollars.

The list of countries with this type of restricted currency includes China, Taiwan, India, Thailand, the Philippines and some South American countries. Even though transactions with parties in the countries must be settled in U.S. dollars, most of the currencies are relatively free to fluctuate against the US dollar, with consequences for the costs of goods exported to or imported from these countries.

With the potential of FX exposure impacting the profitability of businesses of all sizes by up to 15 percent per transaction, a key part of the global business strategy should be to collaborate with an experienced and established financial partner like Associated Bank.

For more information about foreign exchange products and services call us at 866-524-8836 or email us at fxcapmarkets@AssociatedBank.com.