We understand our client’s business and the impact of various currency and Interest Rate fluctuations on the bottom line of their business. Effective monitoring of the FX and Interest rate exposure along with strategic advisory ensures that all the FX and Interest rate risk are effectively managed. Our tailor made strategic risk management approach is the essence of our portfolio management as we ensure to make our client’s exposure superior and risk-adjusted.
If your company sells goods and services abroad or receives those from other countries, it is your daily business to secure punctual deliveries and payments according to contracts as well as dealing with political and economic risks. The monitoring of potential exchange rate risks is increasingly important. In Export-Import transactions, there are often several weeks between the contract confirmation and the remittance or payment in foreign currency. Due to the volatility of the currency markets, the margin can significantly minimize. In a worst case scenario, a profitable business can even turn into a loss making one.
An Indian import company XYZ Ltd imported goods worth 1,000,000 USD at USD/INR rate of 60.00. XYZ Ltd took buyers credit for 6 month at L+0.50 for the payment. Company did not hedge the buyers credit as the premium was around 2.40 paisa (8% annualized).When buyers credit payment date arrived, USD/INR rate was at 63.50. Now because of exchange rate fluctuation, company’s cost of fund became 12% (approx).
Our approach is Risk Measurement and Risk Management. BlacPearl Consultancy LLP first tries to understand the risk of your business and then develop a tailor made FX and Interest rate risk management strategy for your business which will be cost effective as well as constructive in terms of protecting your benchmark cost and exposure. This would actively support you ,in your efforts to manage currency and interest rate risk. Through our effective MIS System maintained at our end, you need not worry about continuous monitoring of your current FX and interest rate position and the related risk. This helps you to take the necessary decisions in time and secure your margin. If you want to hedge your FX risk with financial instruments, we assist you to identify affordable solutions tailored as per your needs in the financial market. Besides classical instruments of the forward exchange market, we also include new and innovative solutions in our risk management approach.