Money market hedge

Money market hedge

The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction.
References in periodicals archive ?
A money market hedge tries to eliminate foreign currency risk by trading the currency today on the spot market.
To perform a money market hedge USB will undertake three steps:
Summary of costs $ Forward contract 1,933,862 Money market hedge 1,940,586 Futures market 1,917,000 Option 1,935,500
You will buy a forward contract, buy at spot using a money market hedge, buy pounds sterling futures or buy (call--buy pounds sterling) options.
A money market hedge involves simultaneous borrowing and lending activities in two different currencies to lock, in the home currency value of a future foreign currency cash flow.
Time to dust-off your currency risk management plans, if you haven't done so already, and conduct a keen review of those hedging instruments like your Forward Exchange Contracts, Money Market Hedge, Futures, Options and Swaps.
These techniques include forward market hedge, futures hedge, money market hedge, currency options, exposure netting and the use of official export/financing agencies.
Describe a money market hedge that could be used to eliminate the exchange rate risk associated with the Dec.
A money market hedge is generally an arrangement with the bank requiring St.
The money market hedge locks in a payment price at the time of the December 2005 order equal to $259,758.
While a money market hedge will eliminate exchange rate risk, the cost of the hedge is relatively large given the spread between interest paid in US dollars and interest received from the deposit.