You're navigating international agribusiness trade. How can you manage risks from fluctuating exchange rates? (original) (raw)
Last updated on Sep 22, 2024
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To manage the risk from fluctuating exchange rates in international agribusiness trade, I would hedge currency exposure using forward contracts or options to lock in favorable USD-INR rates. Additionally, invoicing in a stable currency and maintaining a mix of currency reserves could mitigate volatility impacts on profitability.
Some UK farmers (not many) export directly, particularly those with niche or high-value products. To hedge against exchange rate fluctuations, they often employ forward contracts, which lock in exchange rates for future transactions, or currency options that provide the right to exchange at a predetermined rate (as Vikramaditya has already mentioned). Some farmers use natural hedging by matching foreign currency income with expenses in the same currency. Others diversify their export markets to spread risk. Additionally, some farmers work with financial advisers to develop tailored hedging strategies or utilise CTRM platforms (like Agiboo) that offer built-in currency risk management tools.
Agribusiness
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