How to Factor Interest Rate Risk in Your Hedging Policy?

Do interest rate risk have the same weight as FX risk? Interest rates are usually far less volatile than FX rates, therefore a company’s FX exposure is usually greater than its interest rate exposure. However, the latter must not be ignored, as interest rate fluctuations can be as unpredictable as FX rate changes.

What is the impact of interest rate volatility on a company? 

The infographic below summarizes the interest rate risk in six scenarios:

How to Factor Interest Rate Risk in Your Hedging Policy? 1

Click here if you want to read more about managing interest rate risk.

Download the PDF version of Statrys Treasury Guide 2020 – Chapter 4

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Statrys treasury guide aims to provide a detailed picture of the financial risks faced by companies and the solutions that can be implemented to manage those risks.
The first chapter of this guide lays out the main financial risks faced by companies when running their operations. The following chapters detail hedging solutions for each of these risks.

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