Currency Futures for Businesses

Don’t let currency fluctuations affect your profitability

In today’s global marketplace, many companies sell goods and services in countries other than their home country. Many also import foreign-made goods and services, either to re-sell in their domestic markets, or to use in their own businesses. When a company buys from or sells to a foreign country and settles the transaction in the foreign currency, the company faces transaction risk.

Many Canadian companies have foreign subsidiaries. When the parent company prepares its financial statements, the assets, liabilities, and profits and losses of all its subsidiaries are consolidated into one set of statements. Translation risk is the risk that a company will experience a loss when it converts the foreign subsidiary’s statements into the company’s home currency.

Any money manager who invests in foreign securities also faces foreign exchange risk since he or she must pay for the security using foreign currency and bears the risk that the foreign currency will lose value relative to the domestic currency. Any loss on the currency could eliminate any gain, or exacerbate any loss produced by holding the foreign security.

Whether you are a business with foreign operations, one that imports or exports goods to and from Canada, or if you are a money manager that invests client assets in foreign markets, the Burak Hannon Brojde Group can help you devise comprehensive currency hedging strategies that will help to manage your foreign currency exposure and maintain the profitability of your business.