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Wells Fargo Foreign Exchange

Wells Fargo Foreign Exchange. Carine Gursky FX Specialist carine.p.gursky@wellsfargo.com 800-788 3132. FX has the Largest Markets. Worldwide Stock Markets Total per year $18,000,000,000,000 (18 Trillion) Source: NASDAQ Foreign Exchange Totals Total per year $360,000,000,000,000

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Wells Fargo Foreign Exchange

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  1. Wells Fargo Foreign Exchange Carine Gursky FX Specialist carine.p.gursky@wellsfargo.com 800-788 3132

  2. FX has the Largest Markets Worldwide Stock MarketsTotal per year $18,000,000,000,000 (18 Trillion) Source: NASDAQ Foreign Exchange Totals Total per year $360,000,000,000,000 (360 Trillion) 20x

  3. 11 PM Monday 3 PM Monday 8 AM Tuesday The FX Markets Never Sleep When it is 3pm on a Monday in the U.S. Yen traders are arriving atTokyo

  4. EUR moved 17% over last 12 months

  5. JPY moved 12% over last 12 months

  6. What Happens When You Don’t Manage FX…

  7. Protect The Value of Your USD 3 things you can do to minimize FX risk to your business • If you buy from overseas, request your invoice in both currencies. •  Pay your supplier in the cheaper currency

  8. Protect The Value of Your USD (cont.) • Save time by managing your foreign exposure online •  Check live exchange rates online •  Execute standing orders in case the market moves in your favor •  Handle your foreign exchange payments when most convenient for you, 24/7

  9. Protect The Value of Your USD (cont.) • For ‘large’ amounts payable in the future, lock in exchange rates today that can be used to assure their value tomorrow. •  Forward Contract •  Options Contract

  10. Forward Contract It is the right and the obligation • Contractual agreement to use today’s rate of exchange for a future payment • Value date is anywhere from 3 days to 365 days in the future • No settlement of US dollars until future date • There is no premium to enter into a Forward Contract

  11. Forward Contract Example • Wineco importer imports wine from France. • They have just negotiated the price of a container of wine at 320,000 EUR. The wine will be shipped via container and will arrive in 3 months. • The bill is payable upon the container arriving at the port. • Forward Contract: Wineco can lock-in today’s exchange rate for 3 months with a forward contract. No dollars are exchanged until his payable is due. • The rate will not fluctuate once it’s locked-in, and the importer can price his cases for distribution without fear that his costs will change.

  12. Options Contract It is the right but not the obligation • Contractual agreement to purchase the right, but not the obligation, to use a predetermined exchange rate for a future payment • Value date is anywhere from 3 days to 365 days in the future • There is sometimes a premium • No cost options contracts can also be structured

  13. Options Contract Example • Wineco importer imports wine from France. • They have just negotiated the price of a container of wine at 320,000 EUR. The wine will be shipped via container and will arrive in 3 months. • The bill is payable upon the container arriving at the port. • Vanilla Options Contract: Wineco can purchase the option to use a guaranteed exchange rate. • If the market moves in his favor, Wineco is not obligated to use the option. • If the market moves against him, Wineco is protected with the option.

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