About
Practical strategies for managing your exposure to FX and interest rate movements
“Very good course, I will definitely recommend to others. I have learnt a lot.”
Paul Adolph, Financial Controller, Equitable Group
ABOUT:
Your business is open to risks from movements in competitors’ prices, raw material prices, foreign exchange rates and interest rates, all which need to be effectively managed.
Future cash flow projections, profitability, competiveness and the ability to service debt can all be impacted by foreign exchange volatility when paying or receiving foreign currency.
All businesses trading overseas and increasingly in domestic markets, will have some exposure to exchange rate movements either directly or indirectly. Whilst exposure to exchange rate movements can be an inevitable part of everyday activity, the risk arising from such exposure can be controlled.
This seminar is for everyone who needs to know more about foreign exchange and how to manage interest rate risk. As well as examining foreign exchange principles, it will define interest rate risk and then explain how interest rates are quoted and how interest amounts are calculated.
Key Learning Objectives
On completion of this seminar, delegates will be able to:
• Understand the quoting conventions in the markets
• Explain how companies account for foreign exchange contracts
• Examine the range of products available to manage foreign exchange risk
• Discuss the differences between transaction and translation exposures
• Compare economic risk to accounting risk
• Understand why a good foreign exchange policy is critical for sound risk management practices
Who should attend?
This course will be useful for:
• Treasurers and their staff
• Sales and marketing staff in banks
• Brokers
• Fund managers
• Finance managers
• Auditors
• Accountants
• Financial controllers
• Compliance staff
• Exporters
• Importers
• Risk Managers
What last year’s delegates had to say:
“Gave me a clearer understanding of products and helped me to think more about our risk/treasury profile.”
Fenella Gray, Investment Manager, ACC
“Excellent presenter, would recommend Leon’s courses to anyone. Very knowledgeable speaker.”
Lynn Dilger, Finance Manager, Tamblar Products
Outline
FOREIGN EXCHANGE MARKETS AND RISK MANAGEMENT STRATEGIES
Defining foreign exchange risk
• Basic accounting risk: Transaction vs translation exposures
• Economic risk
• Risk not captured by accounting
• Accounting risk that is not economic (systems, fraud, etc)
• Using financial statements to uncover quantum of FX risk
• Other sources of information on FX risk assessment
Understanding why the spot rate moves
• Spot and forward rates
• Cross rates
Examining the uses of forward contracts
• Determining the forward rate
• Defining the uses of forward contracts
• Creating a forward contract using interest products
• Non-deliverable forwards
Off-balance sheet items, derivatives
• Constructing synthetics out of forwards and the spot rate
Why companies use options
• Understanding the market terminology
• The option pay off diagram and some key option strategies
• Ratio options
Swaps: FX and interest rate
• Cross currency and interest rate swaps
• Tailoring the structure to cashflow constraints
• Types of currency swaps
• Currency swaps to hedge risk
• Using currency swaps to reduce interest cost
• Some risks associated with currency and interest rate swaps
DAY TWO
INTEREST RATE RISK MANAGEMENT
What is interest rate risk?
• How does it arise?
• What are its components?
• Is it a problem in a low interest rate environment?
• To hedge or not to hedge?
• Company culture and interest rate risk management
• The hedging approach
Interest rate fundamentals
• LIBOR/LIBID, BKBM and other market terms
• Interest calculations for various currencies
• Day counts, business day conventions
Yield curves
• Uses and applications of the yield curve
• Normal/positive
• Inverse/negative
• Flat or segmented
• Applications and examples
Traditional methods of hedging
• Do nothing
• Match funding
Using derivatives for hedging
• Definition, key features, applications and examples
• Forward rate agreements (FRAs)
• Interest rate swaps and swaptions
• Caps, collars and floors
Facilitator
To be confirmed
To be confirmed is also facilitating:
- Best Practice Employment Interviews for Employers
- Career Development for Professional Women
- Collective Bargaining: Issues, Challenges & Solutions
- Commercial Engineer
- Commercialising Technology Through Licensing
- Complex Procurement & Vendor Management
- Conducting Effective Health & Safety Audits
- Consultation, Engagement & Stakeholder Management
- Contractor Management and Control
- Corporate Communications & Strategic PR
- Corporate Social Responsibility
- Current Trends in Fisheries Management and Aquaculture
- Cyber Law Update
- Deploying Emotional Intelligence in Leadership
- Developing & Implementing a Sustainability Strategy in Your Organisation
- Dynamic Pricing and Revenue Management
- Effective Policy Analysis and Development
- Executive Leadership
- Financial Analysis for Lawyers
- Foundations & Principles of Treasury Management
- International Tax
- Managing Policy Projects
- Managing Restructuring & Redundancies
- Managing the Psychological Impacts of Disasters for Emergency Management Workers & Victims
- Marketing and Advertising Law
- Negotiating for Purchasing, Procurement, Contract & Supply
- Online & New Media Marketing Campaigns
- Organisation Structure Design
- Resilient Leadership in the Health Sector
- Salary Structuring, Remuneration & Variable Pay Schemes
- Strategic Brand Management for FMCG
- Strategic Thinking for Policy-Makers
- Sustainable Procurement Strategies
- Systems Thinking for Organisational Learning, Development & Improvement
- Technical Fundamentals for HSNO
In-house Training
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