Every company that imports or exports is familiar with the problem: exchange rate fluctuations impact on the operating result. But there’s no getting around foreign currencies, and exchange rate fluctuations are difficult to forecast due to economic and geopolitical factors. That’s why professional management of foreign currency risks is vital. Stefan Zosso, Senior Product Manager for Foreign Exchange Transactions at PostFinance, explains the options available for hedging against currency risks.
Hedging against exchange rate fluctuations
Importers and exporters can use foreign exchange transactions to reduce foreign currency risks and to manage their company’s liquidity. Our expert tips show how SMEs that operate internationally can secure their liquidity flow.
Stefan Zosso has worked at PostFinance since April 2005. In his role as Senior Product Manager for Foreign Exchange Transactions, he is responsible for financial and technical management of the foreign exchange transactions product group.
Tip 1: Hedge against exchange rate fluctuations in the long term
Every company that purchases goods abroad or has international sales operations is familiar with foreign currency risks. That’s why global trade is based on foreign currency accounts, which enable you to carry out currency exchange transactions at the time of your choosing. Foreign currencies are traded all over the world, and the rates are constantly changing. A negative price trend can result in losses. Foreign exchange forward contracts allow you to counteract surprising exchange rate fluctuations and to hedge against foreign currency risks with guaranteed rates. You can also improve liquidity planning, as you know exactly how much money is flowing and when.
PostFinance offers forward contracts up to two years in the future. Forward contracts can be concluded only by phone. The minimum amount per transaction is CHF 35,000.
Tip 2: Hedge against exchange rate fluctuations immediately
Spot transactions enable companies to hedge against exchange rate risks immediately at the real-time rate. Amounts are unlimited over the phone, while transactions up to a countervalue of CHF 249,999.99 can be executed via e-finance or the
PostFinance App. Make as many rate queries as you like online, and try out entering amounts. You’ll receive a choice of three value dates for each rate query and will obtain a reliable calculation basis with fixed and guaranteed exchange rates after completion of the transaction. Swap transactions are also a great option for cash management – these involve sale of a currency on the spot date and simultaneous forward repurchase, or vice versa.
At PostFinance, you can execute spot transactions from CHF 1 by phone or conveniently online, with 0 to 2 value dates after completion of the transaction. From CHF 50,000 per transaction, you benefit from better conditions, and you enjoy the best conditions on telephone orders from CHF 250,000.
Key information about foreign currencies and trading them
What you need to know if you’d like to trade foreign currencies.
They are foreign means of payment denominated in the currencies of countries abroad. In banking, foreign currencies are receivables or credit with third parties in a foreign currency. Cash isn’t considered foreign currency unless it’s paid into an account. Companies wouldn’t be able to trade internationally without foreign currencies.
Foreign exchange transactions involve the purchase or sale of currencies immediately or within a certain period at a fixed rate. Foreign exchange trading includes spot transactions, forward contracts and swap transactions – a combination of spot transactions and forward contracts where there is an immediate exchange into one currency and the re-exchange at a later date is agreed at the same time.
The Swiss franc (CHF), the euro (EUR), the US dollar (USD), pound sterling (GBP), the Japanese yen (JPY) and the Australian dollar (AUD) are most frequently traded. They are all based on the major global currency, the US dollar. This means that the following currency pairs are traded particularly often worldwide: GBP-USD, USD-CHF, USD-JPY, USD-CAD, AUD-USD and EUR-USD.
Companies that operate internationally can use foreign exchange transactions to hedge against exchange rate risks and to manage their liquidity. At PostFinance, you can trade foreign currencies independently in 45 currency pairs with ease in e-finance or the PostFinance App or enjoy the benefits of completing transactions over the phone. An overview of the various foreign exchange transactions at PostFinance can be found at The link will open in a new window postfinance.ch/foreign-exchange.