Why hedge against currency risks?
Currency risks occurs due to the time lag between order and payment dates, which are usually weeks or months apart. Let’s take a simple example:
Your company orders goods from the United States in February 2018, for 1.000.000 USD. At a 1,25 exchange rate you assume you will pay around 800.000 Euro. You are planning to sell in Germany with a profit margin of 10%.
Your American partner fulfils the order. The EUR/USD exchange rate shifts slightly to 1,15. You receive your order and the bill for 1.000.000 US-Dollars.
You have to pay your bank roughly 870.000 Euro including fees. This is 70.000 Euro more than expected. In effect you lost more than 85% of your profit margin through unhedged FX risks.
Why use Forexfix?
Book guaranteed exchange rates online within minutes
Infinite transactions without minimum volume or base fee
True mid-market rates and a lower commission than banks
How exactly does the application work?
Upload your ID, and we do everything else necessary for the compliance check.
Specify by which date your counterpart is expecting which foreign currency payment.
With one click you get a guaranteed future exchange rate, with another one you book it.
You transfer the down payment now, and later the rest, at the guaranteed rate.
You do not have to worry about bad exchange rates cutting into your profit margin.
How does Forexfix hedge currency risks?
The financial products come from our partner Currencycloud Ltd, an established payment engine in the FX market.
Live market rates and automated placement of orders is provided through API technology.
In most cases we use deliverable forwards, bank products usually only sold offline, for high fees and to very big clients.