FX Risk Management & Advisory
Currency exposure, managed as a function
This practice covers exposure identification, hedging strategy, mark-to-market reporting, and ongoing treasury outsourcing for companies with foreign-currency exposure arising from trade, External Commercial Borrowings, or foreign-currency loans.
Services
Scope
Companies with turnover up to ₹5,000 Cr and foreign-currency exposure — importers, exporters, and ECB/FCNR borrowers — without a dedicated in-house treasury function.
Currency Risk Advisory & Hedging Strategy
Exposure mapped, then hedged
Exposure is mapped across trade exposure, capital account exposure from ECBs and FCNR borrowings, and contingent exposure from letters of credit and bank guarantees. A hedging strategy is then designed using forwards, options, and natural hedges, based on the company's risk appetite and cash flow position.
Scope of work
- Exposure identification and mapping
- Hedging policy design
- Forward / option / structured hedge recommendations
- Natural hedge identification
Cross-reference
Capital account exposure typically originates in an ECB or overseas borrowing. Raising that debt sits with the Investment Banking practice; the hedging strategy is designed before disbursement.
ECB / Overseas Borrowing Advisory →Treasury Outsourcing
The core retainer engagement
Ongoing exposure monitoring, mark-to-market valuation, and hedge performance reporting, delivered on a weekly and monthly cycle, with a quarterly presentation to the CFO or board.
Deliverables
- Weekly exposure snapshot
- Monthly mark-to-market and hedge performance report
- Quarterly board presentation
- Half-yearly / annual strategy review
Fee
A fixed monthly retainer covering the scope above, plus a profit-share component calculated on demonstrated savings above an agreed hurdle. The profit-share invoice is raised only after the reconciliation is agreed with the client's CFO or treasury team, on a half-yearly or annual cycle.
Trade & Hedge Management
Every trade and hedge, tracked centrally
Export sales, import purchases, receivables, and payables are recorded alongside the hedges placed against them, so trade and hedge positions are never tracked separately.
Scope of work
- Export sales, import purchases, receivables, and payables recorded with real-time market rates
- Hedges recorded for contracted or anticipated exposures
- Hedges connected directly to the trades they cover
- Hedge utilisation and cancellation tracked
- Daily evaluation of hedge pick-ups against cash transactions
Part of
Delivered under the Treasury Outsourcing retainer, alongside exposure monitoring and mark-to-market reporting.
Treasury Outsourcing →Live Currency Rates
Rates, monitored continuously
Currency rates are tracked in real time from global brokers, financial data providers, and central banks, covering 70+ currency pairs.
Scope of work
- Real-time traded currency rates from global brokers, financial data providers, and central banks
- Preferred currencies tracked on a dedicated watchlist
- Risk and gains quantified against forward and spot rates
- Exchange rates covering 70+ global currency pairs
- Alerts when a currency reaches a target rate
Feeds into
Rate tracking feeds directly into the hedging strategy designed under Currency Risk Advisory & Hedging Strategy.
Currency Risk Advisory & Hedging Strategy →Reporting & Analytics
Performance measured against the market
Treasury performance is assessed across all trades and hedges, with FX risk management decisions reviewed over a specified time-frame.
Scope of work
- Rate realization on completed trades
- P&L on cancellation of hedges
- P&L on hedged transactions vs. market rate
- P&L booked on unhedged transactions vs. benchmark rate
Part of
Feeds the weekly, monthly, and quarterly reporting cycle delivered under Treasury Outsourcing.
Treasury Outsourcing →Bank & Cost Benchmarking
Pricing, tested against a panel
Bank FX conversion rates and margins are benchmarked against a panel of banks, and the results are used to negotiate pricing with existing banking partners.
Scope of work
- Panel rate benchmarking
- Margin and charge audits
- Negotiation support with existing banking relationships
Regulatory Desk (RBI / FEMA)
Regulatory change, tracked and calendared
This function tracks RBI and FEMA regulatory changes relevant to foreign-currency transactions and maintains a compliance calendar for clients with ECB or trade exposure.
Scope of work
- Regulatory update tracking
- Compliance calendar maintenance
- Documentation guidance for RBI / FEMA-linked transactions
Cross-reference
RBI / FEMA compliance for a new ECB is coordinated at the borrowing stage by the Investment Banking practice; this desk maintains compliance from disbursement onwards.
ECB / Overseas Borrowing Advisory →Market Research
Market commentary, on a fixed cycle
Daily commentary
Rate movements and factors relevant to hedging decisions.
Weekly bulletin
The week's currency picture, consolidated.
Monthly outlook report
Positioning for the month ahead.
The other practice
Investment Banking
Companies borrowing overseas raise the debt through the Investment Banking practice — debt syndication, structured and working capital finance, and ECB advisory for requirements of ₹25 Cr and above. The resulting currency exposure is managed here.
Investment BankingDiscuss a requirement
An initial call to review the funding requirement or currency exposure — scoped engagement letter to follow.