Retail Leather Goods ManufacturerOne of our clients, whose company specializes in women's leather accessories, approached us for help managing the company's monthly euro exposure.
Our foreign exchange specialists discussed how forward contracts could secure a rate of exchange today for a predetermined amount of foreign currency to be used at a future date. After deciding to use a forward contract, our client was able to lock in the exchange rate for the first half of the year — enabling the company to budget properly — but did not have to pay for euros until the contracts matured.
Now our client knows what the cost for goods will be ahead of time, regardless of the value of the euro in the future. In addition, we discussed how adding a 30-day window to its exchange contracts could increase flexibility, in case the goods were delayed for any reason.