Forex Hedge Accounting Treatment
OANDA’s FXConsulting
for Corporations
23
brokers offered credit to their clients, then the cost of credit management and written-off
accounts would be charged to all its customers through higher rates and set-up fees.
The example excludes the interest earned on the funds held at the online forex broker margin
account. Ensure your online forex broker pays competitive interest on all outstanding margin
balances.
Summary
There are a number of benefits when you use the carry spot market to complete an economic forex
hedge, the chief benefit being flexibility. Some online forex broker platforms let you choose the exact
amount to hedge—if not 100,000 euros, then 95,022 or 45,581, or any amount you need. The date
when the account receivable is collected does not pose any difficulty when setting the hedge as the
carry spot trade may be closed at any time, whether earlier or later than initially anticipated. Further, if
the receivable is collected in two payments, you can close out the carry spot hedge in stages.
If US Gadget had used forex forwards, on the other hand, then the hedging amount would have had to
match the contract size (100,000 euros) and the forex forward date of 60 days would likely not have
matched the actual date when the currency was collected or converted.
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