These are exciting times for the Services industry. On one end, there is increasing competition every day and at the other end, the industry is growing. The challenges of Cyber offenses, security breaches, data breaches, increased clients’ safety looms big. There are regular updates on the regulatory aspects which the industry needs to be aware of and incorporate. The industry is using more and more analytics, AI, data management, technology, processes to streamline their functioning for achieving quality, speed and cost-effectiveness. The need of the hour as always has been in this industry is for Exceeding Customer Expectations.

The services industry is an out and out exchange-earners. They have revenues primarily in USD and Eur with some sizable portions in GBP and JPY. Apart from these currencies, they have exposures in many other currencies and interestingly even in some exotic and highly fluctuating currencies. They also have spendings in the currencies where they earn. Managing the risks in exotic currencies remains a challenge. Fx volatility has a huge impact on their profitability. So making a proper budget and managing the Fx effectively remains the key concern. Its also important to Identify the cycles, risks, effective hedging strategies for success in their business.

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Client Scenario

This client in the Services sector is a wholly-owned subsidiary of a major international group with earnings mostly in the USD. They approached us three and a half years back. We understood their exposures, processes and realized the potential they had for saving costs and earning profits as they did not have a framework for risk management and had not been hedging systematically. Since then QuantArt has provided them full support in their forex risk management and capability building of their team. After we came on board their two other main challenges were resolved. Earlier their revenue was not insulated from the adverse market movement and also the banks were charging unreasonable markups in conversion. QuantArt helped streamlined the process, identified the FX risk, made a risk management policy, negotiated with banks so that our client gets the right rate, and developed a system of hedging systemically to manage their risk. We have also helped them get the hedge lines on favorable terms. In the last three and half years, our client has never lost money on the FX front. We every day advise them on how much, when, and at what rates to hedge.In fact they have had considerable savings. Even during the Covid-19 times, they have done well.

The company needed to protect its revenue with a risk management objective at an uncertain time of Covid-19.

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Hedging Regulations - Importers, Exporters and Foreign Currency Borrowers

1st July 2022, 3 pm IST onwards

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