Adding Value with US Dollar Hedging Strategies

 

Customer deposits in currencies other than the Home Currency create an unknown liability for financial institutions. The cost of returning these foreign exchange deposits depends on the exchange rate at the time when the customer withdraws funds. Typically, financial institutions attempt to eliminate any uncertainty due to the volatility in exchange rates by off-setting FX liabilities with an equal amount of FX investments.

Although this is a no risk strategy, it is also very much a no gain strategy.

Even those financial institutions that attempt to manage FX liabilities by off-setting them with FX assets get into trouble when foreign exchange is not closely monitored. Losses pile up quickly due to larger than anticipated customer foreign exchange activity. The easy money made buying/selling FX at the branch level can easily be twittered away by inexperience and neglect at the head office.

Tuff Risk Treasury manages your foreign exchange assets and liabilities with the sole objective of making money for your organization. Tuff Risk understands the trending nature of foreign exchange and takes advantage of the daily volatility to earn your organization a positive return. Earnings that were never paid attention to before.

When currencies show signs of trending, Tuff Risk purposely creates a controlled mismatch on your balance sheet between FX assets and FX liabilities, As the Dollar weakens, Tuff Risk holds less of it. As the Dollar strengthens, Tuff Risk holds more of it.

The potential gains to your organization are significant, as can be seem from past client experience. The most recent review of FX client earnings shows that for every $100,000 off-set position taken, annualized gains of $42,000 have been delivered to the client, after fees. Typically, Tuff Risk will limit risk to 10% of FX deposit liabilities, so if your organization has $5,000,000 in FX deposits, the asset/liability mismatch will be limited to $500,000.

Tuff Risk is so confident that it can make your organization money, we will not charge fees unless we do make you money. Not one quarter at a time but consistently and cumulatively over time.

We have proven to ourselves that we can do it. We have proven to our clients we can do it. Let us prove it to you.