Foreign exchange risk management for businesses and investors
Currency market fluctuations can significantly impact your cash flows. Manage your foreign exchange risk with our tailored solutions.
FX exposure audit →What is foreign exchange risk, and why does it matter to your business?
Foreign exchange risk refers to the impact that currency fluctuations can have on your company's finances. Whenever you buy, sell, invest, or receive payments in a foreign currency, movements in the FX markets can affect the actual cost of your transactions and the profitability of your business.
Often underestimated, foreign exchange risk can have a real impact on margins, make budgeting more difficult, and create financial uncertainty. A proper hedging strategy, on the other hand, helps secure costs, protect revenues, and improve visibility over your international cash flows.
Let's take the example of a French company that places an order for $100,000 worth of goods from a US supplier, with payment scheduled in three months’ time.
At the time of the order, the EUR/USD exchange rate is 1.10, meaning the cost is approximately €90,900. If, three months later, the euro has weakened and the rate has moved to 1.00, the same invoice will then cost €100,000.
Without any change to the price agreed with the supplier, the company therefore has to pay nearly €9,100 more solely due to movements in the foreign exchange market.
Currency fluctuations can make it difficult to forecast future costs, revenues, and margins. A business exposed to foreign exchange risk may see the profitability of a transaction change between the time a contract is signed and when payment is actually made.
Implementing a hedging strategy improves visibility, secures budgets, and enables more confident decision-making.
Without hedging, adverse currency movements can reduce your margins, increase the cost of your international purchases, or decrease the value of your foreign currency revenues.
Beyond the direct financial impact, the absence of hedging can also make budgeting more difficult and create significant volatility in a company’s results. The higher the foreign currency volumes, the more material these risks become.
Who is actually exposed to foreign exchange risk?
Any company or investor carrying out transactions in a currency different from their base currency is potentially exposed to foreign exchange risk. This exposure can affect both regular cash flows and one-off transactions with significant financial impact.
You purchase goods, raw materials or equipment abroad and pay your suppliers in USD, CNY, GBP or any other foreign currency.
You invoice your customers in a foreign currency, and your revenues may vary depending on movements in the foreign exchange markets.
You enter into contracts spanning several months or years, with costs or revenues denominated in a foreign currency.
You have subsidiaries, offices, or recurring flows in multiple countries and need to manage incoming and outgoing payments in different currencies.
You aim to protect your company’s margins, improve budget visibility, and implement an FX risk management policy tailored to your business.
You are purchasing a property abroad with a payment schedule spread over several months or years. An unfavourable exchange rate movement can significantly increase the final cost of your investment.
Our four-step method
1
Analysis of cash flows and identification of exposure
We analyse your international cash flows to identify your currency exposure: supplier payments, customer receipts, investments, intra-group flows, which currencies are involved, and their timing.
2
Designing your FX strategy
Based on your activity, visibility and risk tolerance, we define a tailored hedging strategy: partial or full coverage, and short-, medium- or long-term.
3
Implementation of the hedging strategy
We support you in the gradual implementation of the most suitable hedging instruments (forward contracts, dynamic forwards, etc.), in line with your financial objectives.
4
Ongoing monitoring over time
Foreign exchange risk is constantly evolving. Your dedicated Devyzz expert, with over 10 years’ experience in FX markets, regularly monitors your exposure and adjusts the strategy when necessary to maintain a level of protection aligned with your business activity and financial objectives.
Tools to manage your foreign exchange risk
We offer a range of hedging instruments tailored to each company’s level of exposure, visibility, and objectives.
Spot transactions
Spot trade allows you to execute an immediate foreign exchange transaction at the current market rate. It is suitable for one-off needs or short-term payments.
Forward contracts
Forward contracts allow you to lock in an exchange rate in advance for a future date. They provide full visibility over your costs and help secure your margins.
Dynamic forwards
Dynamic forwards are an alternative to traditional forward contracts. They allow you to secure an exchange rate while still benefiting, depending on market movements, from partial or full participation in favourable rate improvements, in exchange for a less favourable initial rate.
Frequently asked questions about forward contracts
The main risk is that, since the rate is fixed and the currencies are bought in advance, you might miss out on benefiting from a favourable change in the exchange rate between the transaction date and the maturity date. Additionally, if the spot market moves unfavourably, a margin call may be required to cover the position in a loss to protect against counterparty risk. Finally, any cancellation or modification of a forward contract may incur additional costs. Therefore, it is important to carefully assess these risks before entering into a forward contract.
A margin call is a request made by a broker or financial institution for you to top up your account by adding additional funds. This request occurs when the latent value of the assets held in your account, compared to their spot market value, falls below a critical threshold known as the maintenance margin.
In other words, a margin call is issued when your forward contract becomes "out-of-the-money," meaning that the current spot market value is less favourable than the rate set in the contract. If you do not respond to this margin call by adding the necessary funds, your position may be automatically liquidated to limit losses.
A margin call is an essential protection mechanism for the financial institution and the financial markets in general, as it safeguards against potential default risks. However, it also represents a significant risk for the client if the market moves strongly against them.
Read our full article : Read our full article: What Is a Margin Call? Definition, How It Works, and Key Considerations.
When setting up a forward contract, we typically require an initial deposit of 5% of the total amount, to be paid immediately after the contract is established. This deposit is not a fee but a pre-payment that will be deducted from the final amount due when you use the forward contract. It also helps reduce the risk of a margin call in case of unfavourable market movements.
If you wish to reduce or even eliminate this initial deposit to further optimise your cash flow, we can submit your request to our financial department. They may, in some cases, accommodate this request after a thorough review of your company's finances.
You can set up a forward contract with a maturity ranging from one week to 2 years. This typically covers nearly all the hedging needs of a traditional business or individual.
In very specific cases and for particular projects (such as a real estate project or an investment extending over several years), Devyzz can assist with maturities of up to 5 years. Feel free to contact our trading room if you would like to learn more.
Optimise the timing of your transactions
The timing of your currency conversion can have a significant impact on your costs. Our experts monitor the markets to help you identify the most relevant opportunities.
You can also set up alerts and automated orders to execute your transactions at a pre-defined exchange rate, even when you are not available.
The objective is to improve responsiveness, secure better exchange rates, and reduce the impact of market volatility.
Maximum hedging horizon
5 yearsHedging for the most exotic currencies
140FX risk management support since
2011Average experience of our FX experts
10+ yearsRestructuring existing hedging strategies
Not all hedging strategies are suitable for every situation. A company may end up with hedges that are no longer aligned with its evolving activity: a contract is cancelled, a supplier changes, a project is delayed, expected volumes fail to materialise, or a previous provider may have structured the strategy suboptimally.
Our experts support you in managing and, when necessary, restructuring your FX hedging positions to realign them with the reality of your business. The objective is to preserve your company’s flexibility while maintaining a disciplined approach to managing currency exposure.
Let’s formalise your FX risk management policy
Many SMEs and mid-sized companies are exposed to currency fluctuations without having clearly defined internal policies. Yet, an FX risk management policy helps secure decision-making, improve financial visibility, and structure internal processes.
Devyzz experts support CFOs, Finance Directors and Treasurers free of charge in defining and formalising your hedging policy: objectives, hedging horizons, protection levels, responsibilities and internal procedures.
Let’s formalise your FX risk management policy
Many SMEs and mid-sized companies are exposed to currency fluctuations without having clearly defined internal policies. Yet, an FX risk management policy helps secure decision-making, improve financial visibility, and structure internal processes.
Devyzz experts support CFOs, Finance Directors and Treasurers free of charge in defining and formalising your hedging policy: objectives, hedging horizons, protection levels, responsibilities and internal procedures.
Turn your FX risk into a managed strategy with Devyzz
Without Devyzz
❌ Less favourable exchange rates
❌ Exposure to foreign exchange risk without a structured framework
❌ Pressure on business margins and difficulty in forecasting budgets
❌ Independent monitoring of FX markets
❌ Reactive management of FX transactions
❌ High volatility in financial results
💚 With Devyzz
✅ Competitive exchange rates
✅ Tailored hedging strategy
✅ Clear visibility of your FX exposure
✅ Better protected margins and more stable results
✅ Reliable and structured FX decision-making
✅ Proactive management of your FX transactions
✅ Support from a dedicated expert for market monitoring
To go further
Frequently Asked Questions
Here are some frequently asked questions about foreign exchange risk management.
It is generally relevant to consider hedging as soon as currency fluctuations could have a material impact on your margins, budget, or project profitability. The larger or more predictable your international cash flows, the more useful a hedging strategy becomes.
Not with Devyzz for standard forward contracts. Regulation generally requires companies to have a LEI (Legal Entity Identifier) to access certain more advanced FX hedging products. Obtaining a LEI is a straightforward process, and our team can support you if needed.
Read our article on the topic: LEI number – how to obtain it for your FX transactions?
As with spot transactions, we do not charge any setup or management fees. Our remuneration is embedded in the exchange rate, which is always clearly displayed and validated by you before any transaction.
The rate offered depends on several factors, including the currencies involved, the hedging horizon, the amounts to be covered and the type of solution selected. Our experts systematically present the applicable terms with full transparency before implementing your strategy.
Our commitment: to provide hedging solutions that are simple to understand, fully transparent, and offered under competitive market conditions.
Thanks to our online platform and the support of your dedicated expert, you have full visibility over your hedges and maturities. This gives you a simple, centralised overview, without the need to monitor the markets on a daily basis.
A spot transaction involves buying or selling a currency at the current market rate for immediate execution. A forward contract, on the other hand, allows you to lock in an exchange rate today for a transaction that will take place at a future date, providing greater visibility over your costs or revenues.
Yes. Beyond major currencies such as the euro, US dollar or British pound, Devyzz also enables hedging strategies across many emerging or less commonly traded currencies. Our experts assess each requirement on a case-by-case basis.
Read our article on the topic: What is an exotic currency? Definition, examples and key implications for businesses
Your currency strategy, continuously monitored and adjusted
We’re not just there when you set up your strategy, we support you throughout its entire lifecycle, adjusting it as needed, because financial markets are volatile and your needs can change over the course of the year.