How to best determine your FX exposure

  • Post
    • January 31, 2024 at 8:30 am
    Patrick Kunz
    Keymaster
    NL
    In this blog post by GPS capital there are 4 steps mentioned to determine your FX exposure. It’s all about data gathering and structuring.

    However, this might not always be possible or feasible in every company. What is the data is not structured or can be agregated. Or the data is just not there and you have to use projections?

    Happy to hear your struggles and solutions in determine effectively and efficiently your FX exposures.

    Treasurers help each other out here.

    Treasury for champions
Viewing 3 replies - 1 through 3 (of 3 total)
  • Replies
    • May 4, 2024 at 3:15 pm
    Danilo
    Participant
    Hi,

    All data ideally has to be collected at risk identification level or latest at the point in time the risk is materialized (e.g. when the contract is signed). The question is, what is the source of truth to obtain this data including monetary items, balance sheet, sales orders, purchase orders, AP, AR and defined future inflows/outflows milestones?

    Cheers

    Danilo

    • May 21, 2024 at 3:33 pm
    Rafael Reno
    Participant
    When data is lacking, accurate forecasting using available tools and models is crucial. A solid foundation, diverse experience, and decision-making flexibility are essential. As we say in Brazil “If you don’t have a dog, hunt with a cat.”

    Cheers,

    Rafa

    • July 26, 2024 at 8:39 pm
    Gavin
    Participant
    Historical information in the Transaction Currency is corner stone of any hedging program. This applies to both the income statement and the balance sheet.

    This information is in the ERP system(s).

    In the absense of forecasted exposures from a ‘bottoms up’ approach i.e. from tthe business then treasury can utilise the historic information to create a ‘tops down’ forecast. Seasonality, growth rates, one off factors etc. can be used to build a forecast in conjuction with machine learning and AI. The model can then be back tested for accuracy.

    AtlasFX assist clients in the forecasting process with our data management and AI tools.

     

    • This reply was modified 11 hours, 12 minutes ago by Gavin.
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