Foreign Exchange

Foreign Exchange Advisory

In a volatile global economy, effective foreign currency risk management is crucial. QuantArt specializes in tailored solutions to shield businesses from currency fluctuations. We navigate challenges by strategically selecting currencies, implementing effective hedging methods, and managing risks. Our commitment extends to providing practical solutions, empowering clients with informed decision-making. Partner with QuantArt for a proactive approach to foreign currency risk management, ensuring financial resilience in dynamic markets.

We become an extension of your treasury. We use our proprietary algorithms to deliver exceptional results. Our Algorithms have been tested over thousands of simulations. Our experiences and world-class treasury insights will add to your team’s competitiveness. We build capability in the companies we advise in. Our aim is to nurture our client’s team as we would nurture our own employees

Foreign Exchange Risk Management Services

Cost Reduction on Import Payments through Import Hedge Strategy

We will monitor your payments bill by bill date by date and will advise at the right time to hedge along with specific advice on hedge instruments, price and tenor. Objective will be to minimize your payment Fx rate compared to either an unhedged position or against forwarding premium.

Rate Improvements in Exports through Export Hedge Strategy

We will be monitoring your order book, invoice book, and also projected annual exports on a daily basis. We will advise you on when to hedge, how much to hedge, hedge instrument, right rate, hedge tenor, etc. We will help in the execution of the hedge and in any setup with the bank if required. The objective here is to achieve a high annual budget rate and also a higher realization rate compared to an unhedged position or forward rate. The inflows which come, whether to early utilize or convert at the market will also be advised.

Loan Interest Rate Reduction

We will be evaluating your working capital and term loan portfolio. On the working capital, we will advise you when to go for PCFC, PCRE, EPC, FCTL, CC, CP, etc and what rate you should get. On the term loan side, we will advise you on ECB, FCTL, RTL, and how you can manage Foreign currency risk or fixed floating risk so that overall you achieve cost savings.

Risk Reduction - Limit P&L Volatility

We do not focus on savings alone but on risk-adjusted savings. Hence our strategies are conservative and limit risks both economically and on an accounting basis.

Ensure Stability, even in the event of a Currency Crisis or a Sudden Market Shift

There are times when your functional currency INR has moved sharply. Our strategies ensure that in such a scenario, you will never be caught off guard.

Implement Discipline in Forex Management Services

We proactively reach out and ensure that there is required discipline in your forex management, and it is not put into the backburner during stable times.

Use Options and Swaps for Hedging when Required

Using options help at times. However, option-based hedging should not be done without deep understanding. We educate and handhold companies in understanding vols surface, Greeks like delta, gamma, and how to use the Greeks for decision making and monitoring.

Analysis and Evaluation on Alternate Strategies

IRR or net effective interest cost with hedging, Break-even analysis, Cost & Risk optimization, Regulation, Accounting impact, Cash impact, value at risk impact.

Close Monitoring and Advising on Hedging and Risk Management Decisions

Review every-day morning and afternoon by Senior advisors, Morning customized advise Interim advice during the day if required Follow up during the day to ensure advice is implemented timely and not missed out.

Foreign Exchange Risk Management Services

Strategizing and Implementation of Hedge Execution for Cost Reduction

This will include getting the right price on hedge execution, Reduction of credit charge, Avoid trending mark-ups, Narrowing Bid-Offer spread, Using nuances of hedging to improve price, Unwind value calculation, and negotiation strategy.

Regular Market Research and Updates, Data Analysis, Webinars, etc

This will include – Daily morning and evening update, Market Research Reports, Exclusive Reports, Webinars on Currency and related areas, Global markets, Industry movements etc. Analysis and assisting in presentations for Board and Investor meetings if any.

Training and Capability Building

This includes – Regular query resolution and explanation of Practical Concepts, Structured Training to senior management on specific areas/complexities as required, Annual workshop with IIM Calcutta.

Evaluation of Documents

Hedge term sheets, Hedge covenants, Hedge deal confirmation, ISDA, etc.

Setting up the Hedge Process, Getting Banks, etc

Support in counterparty selection, Arranging hedge lines in favorable terms, Selection of right bank based on hedge type.

Implementing Advanced Methodologies for Hedge Management

Live real time MTM, Value at Risk, Risk control, MIS & Control set up.

Valuations - MTM, Quarter end, CVA and DVA

We provide a third-party valuation certificate of hedge instruments which is well accepted in the market and CVA, DVA calculations as well if required. Besides we add value to corporates by negotiating well for unwinding values if required.

Regular Performance Reviews

Meeting and Calls on regular basis for “day to day” operations, Performance review weekly on strategy and plan with the Managing Director/Director, Interim Assessment of performance based on the “objective to be achieved” for Your Company, Quarterly Assessment of performance based on the “objective to be achieved for Your Company.

Global Best Practices in Treasury

Updates to the client on Global best practices and assessment of the clients “Best practices and opportunities” Support in working out the Risk Management Policy.

How we help our Commodity Clients

How we help our Commodity Clients

What is our vision for our clients?

Our aim is to offer a stable and cost-efficient environment for our clients, enabling them to concentrate on their core business areas. We are committed to overseeing all facets of risk management and hedging on behalf of our clients.

With what objective was QuantArt started?

Our intent was to instill transparency in operations, establish quantitative accountability in result assessments, implement strategic excellence based on proprietary algorithms, and exhibit proactive responses to market movements. The ultimate goal was to ensure client profitability regardless of the direction of market fluctuations.

How have we been successful in continuously bringing value for our clients?

We have an outstanding track record of attaining measurable results aligned with the specific objectives we set in collaboration with our clients. This achievement is made possible by our meticulous selection of highly skilled experts in Treasury/FX risk management. What sets us apart is our distinctive approach—our advisory services are directly provided by senior advisors and directors without any delegation. Each client’s portfolio receives dedicated attention from one of the three members of our leadership team. They conduct thorough reviews every morning and evening, strategizing on the optimal course of action. QuantArt aligns closely with each client’s vision, establishing quantifiable and measurable objectives for a mutually successful partnership.

Exclusive Reports

We release well researched reports on Global markets-Outlook and Strategies, Global currencies, Commodities, Risk management and Hedging strategies, Hedging instruments and Best practices. Log on to QuantArt Hedgenius to access our full Exclusive Reports.

On one hand, the UK faces recessionary pressures, with its economy contracting 0.3% in Q4 2023, worse than expected. On the other hand, despite this, the annual inflation rate remains steady at 4% in January 2024. High and persistent inflation complicates rate-cutting efforts to stimulate the economy. The GBP is ready for a sharp move. The question is, are you hedged appropriately? Are you poised to benefit from likely movements? What’s your risk management strategy?

The February 2024 Zinc Outlook Report suggests a complex market ahead. It predicts a near-term dip in China’s zinc output due to increased costs and environmental concerns, potentially supporting prices. Conversely, China’s stimulus measures hint at a demand recovery, influencing market surplus projections. Moreover, disruptions in global smelting operations could exert upward pressure on prices, despite a temporary bearish outlook due to the Chinese New Year and economic slowdown.

The “USDINR Outlook and Strategy” report of February 2024 dissects the intricate interplay between rate expectations and currency performance. It offers a deep dive into the hedging strategies essential for navigating the currency markets. The analysis details the impact of US monetary policy on the Indian Rupee and outlines potential paths for USDINR, considering various global and domestic economic scenarios.

The February 2024 Chinese Yuan Outlook indicates a poised economy with a 4.9% growth in Q3 2023, defying forecasts amidst a property slump. The People’s Bank of China holds the loan prime rate at 3.45%, fostering economic stability. However, the property crisis and trade headwinds persist, with expectations of a continued cautious monetary policy.

The “USDBRL Outlook and Hedge Strategy” report outlines the Brazilian economic scenario, highlighting the Central Bank’s rate cuts in response to slowing inflation and the economy’s modest growth. Despite challenges like fiscal concerns and high interest costs, there are positive signs such as a tight labor market and real wage gains. The report forecasts a short-term USDBRL movement towards 5-5.2, with a medium to long-term uptick expected. It advises importers and exporters on hedging strategies to navigate market volatility effectively.

The “Lead Outlook Report” for February 2024 forecasts a temporary dip in Chinese lead production due to smelter maintenance, impacting global supply. Concurrently, demand is expected to rise, driven by increased battery production in Europe, China, and the US, alongside overall global demand growth. However, the report suggests a balanced market due to a slower rise in global supply, with lead prices anticipated to stabilize in the short term and potentially increase in the medium term, influenced by expanding lead-acid battery production and potential dollar weakening.

We can work with your team to enhance their skills

Training and Capacity Building

Global Financial Markets and the World Economy

Here’s what we will cover during the session-

  1. Global Financial Markets Outlook.
  2. Studying local and global factors that influence the Fx market.
  3. Navigating Global Growth.
  4. Exploring Monetary Policies.  
  5. Quantitative Easing, Balance sheet easing.
  6. Global trade and investment currency.
  7. Risk-on risk-off concepts, multi-asset correlations.
  8. Geopolitical risks to FX, Liquidity and Credit Quagmires.
Fx Hedging - Intermediary

Here’s what we will cover during the session-

  1. Making sense of terminologies – direct/indirect quotes, cash/tom/spot, cross-exchange rates and bid/offer quotes, etc. 
  2. FX forwards – Sell/Buy, Buy/Sell FX swaps and outright forwards. Calculating outright forward bid/offers. Cross forward rates. 
  3. Booking and cancellation – calculating the MTM on cancellation.  
  4. Rollover and early utilization of forward contracts – mechanics of rollover and the relevant pricing concepts. 
  5. Understanding money market & forward premium along with interest rate parity. 
  6. Negotiation strategies – Regular Fx, Cash, Spot, Forwards, Options and Swaps.
Fx Hedging - Advanced

Here’s what we will cover during the session-

  1. Forwards, Par Forwards and LTFX – Pricing. 
  2. Options & Option structures as applicable for exporters and importers. 
  3. Natural hedge and Conversion of Loan into Foreign Currency.
  4. Hedge strategies like Budget Rate Targeting, Dynamic hedging, Laddering.
  5. Regulations related to Hedging.
Options for Loan Hedging

Here’s what we will cover during the session-

  1. Options and option structures :
    1. Call/Put options
    2. Range forward/Seagull and Call spread 
    3. Call spread 
  2. Option pricing :
    1. Black Scholes formula 
    2. Inputs to the formula 
  3. Brief on Vol surface  :
    1. Concept of delta 
    2. Butterfly and Risk reversal
    3. Vol smile and surface 
  4. Deferred premium calculations
  5. Loan hedging strategies using options  :
    1. Call Spread and effective cost calculations 
    2. Offshore hedging strategies (pay as you go etc.)
Fx Exotic Options

Here’s what we will cover during the session-

  1. Fx Exotics – types, payoffs and structuring:
    1. European digitals 
    2. American digitals (touch options) 
    3. Barrier options (KO, KI, RKO, RKI, etc.) 
    4. Accumulators/ Faders 
    5. Target redemption structures 
    6. Asian options 
    7. Forward start options (Ratchet/Clique) 
    8. Basket options 
  2. Pricing and broad structuring given underlying exposures (Imports, exports, Loan, etc).
  3. Risk assessments and Documentation (Deal Confirmations wording etc to safeguard Bank’s interest). 
  4. Risk Management and MTM simulation in different scenarios.
  5. General Do’s and don’ts based on past experiences. 
Hedge Regulations, Risk Management Policy, ISDA, MTM-CVA-DVA Valuation

Here’s what we will cover during the session-

  1. Hedging Regulations, 
  2. Fx Risk Management Policy – Fx, Interest Rate and Commodity Hedging.
  3. ISDA and ISDA Negotiation.
  4. MTM and CVA DVA Valuations. 
Corporate Fx Value at Risk and Hedge Strategy Optimization

Here’s what we will cover during the session-

  1. How to measure and manage Fx Risk using VaR (Value at Risk) and PaR (Profitability at Risk).
  2. How to strategize and optimize to ensure minimum VaR and PaR.
  3. Hedge strategy which maximizes savings and minimizes risks and losses.

We can work with your team to enhance their skills


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