Nghiên cứu về công cụ giảm thiểu rủi ro thanh toán quốc tế (HEDGING)

ANALYSIS KINDS OF HEDGING


GROUP 2

1. Hoang Dieu Linh
2. Pham Thi Phuong
3. Hoang Thi Hoa
4. Dao Thi Phuong
5. Pham Huong Thao
6. Pham Thi Thu Phuong
7. Le Thi Thuong
8. Doan Thi Bich Thao
9. Nguyen Thi Lam Oanh
10.Bui Thi Thuy Linh
11.Nguyen Thi Phuong Thao


Forex hedging strategy
A forex hedging strategy : developed in four parts, including an
analysis of the forex trader's risk exposure, risk tolerance and
preference of strategy
Components:
• Analyze risk
• Determine risk tolerance
• Determine forex hedging strategy
• Implement and monitor the strategy
 3 common method of hedging: Forward Market, Money

Market, Options Market

FORWARD MARKET


FORWARD MARKET
Definition
• ....is an over the counter marketplace that sets the
price of a financial instrument or asset for future
delivery
• ….used for trading a range of instruments: currencies
and interest rate, as well as assets such as
commodities and securities


FORWARD MARKET
Example
Next year,
want to
buy…

MR.THANH

I have..
want to sell…
(same period)

MR.TUAN

Tuan agreed to sell
after 1 year with

104,000 USD

After 1 year, assuming market value of
the house at the time was 110,000 USD,
while Mr.Tuan is obligated to sell the
house for 104,000 USD for Mr.Thanh
following to contract


FORWARD MARKET
Characteristics of forward market
• Transaction Method is direct negotiations
• One party agrees to purchase, the other party agrees
to sell, with a fix price is agreed in advance, but no
actual cash payment at the time when the contract
signed.
• Two parties are obligated to perform the contract
• The term of contract: very flexible


FORWARD MARKET
Characteristics of forward market
• No payment before the contract expires
• Prices is fixed during the term of the contract, no change
• Choose flexible time to pay money
• The tenor price in the future negotiate at the moment
• Implementation (delivery and payment) occurs when
contract expires

FORWARD MARKET
Advantages and disadvantages of forward
Advantages

Disadvantages

• Don’t depend on rise and
• Because of fixed rate, so
decline of exchange rate
both parties will not have
chance to gain benefit from
• The term of contract is very
flexible
changing the exchange rate
• Don’t need to cost in advance • Difficult to negotiate
• Two parties take part in the
• Difficult for businesses if
contract, to reduce cost for
they want to end the
3rd party invited to
contract before the contract
participate in contracts
expires


FORWARD MARKET
Application of Forward Market Hedging
Tourist – Travel Agency
• At one given time in the future, tourist must pay for travel
agency the price of the product/service that they have

signed with the agreed price whether they use the
product/ service or not
• Travel agency must provide the right products/services to
tourist in accordance with pre-defining


FORWARD MARKET
Application of Forward Market Hedging
Example
Ms. Thao

USD
a tour

2/10
sign contract
(USD/VND = 22060)

Travel
agency

• Ms Thao buy a tour of
Ninh Binh – Ha Noi
• Start on 1/11
• Price : 7 million VND
• will pay by USD on 1/11
• Exchange rate USD/VND =
22060
1/11
pay by USD

with USD/VND = 22060


FORWARD MARKET
Application of Forward Market Hedging
Travel agency – Hotel
• Travel agency must ensure that they will pay exactly the
price that be signed in the contract
• The hotel has to provide all the rooms as well as
accompany services to travel agency


FORWARD MARKET
Application of Forward Market Hedging
Example
Meme
hotel

Travel
agency
Bath
Room

1/9
sign contract
(THB/VND = 625.05)

• Cactus travel agency book 10
single rooms
• at 4* Meme hotel in Thailand

• 22 – 24/10
• Total price : 12 million VND
• Will pay by Bath
• With exchange rate:
THB/VND = 625.05
22/10 24/10
TBH/VND = 624.95
(pay by Bath with
TBH/VND = 625.05)


FORWARD MARKET
Application of Forward Market Hedging
Travel agency – Transportation agency
• Travel agency must use and pay the price to transportation
agency that be agreed in the forward contract at the set
time in future
• Transportation agency must satisfy about transportation to
travel agency in accordance with the requirement in the
forward contract


FORWARD MARKET
Application of Forward Market Hedging
Example
Transportation
agency

Travel
agency

RMB
Buses

21/10
sign contract
(RMB/VND = 3.454)

• Cactus travel agency rent 10
buses with 24 seats
• 15/11- 19/11
• Total price : 10,000 RMB
• Will pay by VND on 15/11
• With exchange rate:
RMB/VND=3.454
15/11 19/11
pay by VND
with RMB/VND
= 3.454


FORWARD MARKET
Application of Forward Market Hedging
Travel agency – Travel agency
Ensure the provision and implementation of exactly
what was agreed upon in the forward contract on the
exchange of products and services


OPTION MARKET

OPTION MARKET
Definition
• An option is a contract that gives the buyer the right,
but not the obligation, to buy or sell an underlying asset
at a specific price on or before a certain date.
• An option, just like the exchange rate, a stock or bond,
is a security


OPTION MARKET
Types of options
The two types of options are calls and puts
• A call gives the holder the right to buy an asset at a
certain price within a specific period of time
• A put gives the holder the right to sell an asset at a
certain price within a specific period of time


OPTION MARKET
Participants in the Options Market
• Buyers of calls
• Sellers of calls
• Buyers of puts
• Sellers of puts

The Distinction
Buyers
Call holders and put

holders (buyers) are not
obligated to buy or sell.

Sellers
Call writers and put
writers (sellers),
however, are obligated to
buy or sell


OPTION MARKET
Advantages and disadvantages of option
Advantages
• Reduce risks
• Hedging: limit losses
• Leverage

Disadvantages
• Costs: The costs of trading
options, is significantly
higher on a percentage
basis than trading the
foreign exchange
• Lower Liquidity
• Complexity


OPTION MARKET
Application in Tourism
• Signed between the two parties:

tour operator - travel agency, travel agency - hotel, tour
operator - hotel, tour operator – transport agency
• With the aim of avoiding risks for the buy a put
option or call option in the situation:
+ Economic fluctuations
+ The exchange rate increased or decreased
continuously in a while


OPTION MARKET
Application in Tourism: Put option Example
Tours
(New york - London)

Tour
operator X 10,000 USD/ticket

•

Travel
agent Y

X see that The United Kingdom intends
to withdraw from EU

 GBP/USD rate
(1GBP=1.23 USD)
 tour ticket price can decrease
•

X negotiate with Y

 buying a put option: 10,000 USD/
ticket in 1 months.
 X pay a premium of 500 USD/ ticket


OPTION MARKET
Application in Tourism: Put option Example
Situation 1:

Tour
operator X

Tours
(New york - London)
USD/ticket

Travel
agent Y

•

In 1 months, GBP/USD continue (1GBP =
1.1 USD)

•

Tour ticket price

•

X will still sell 10,000 USD/ ticket on the
contract

: 8,700 USD

Situation 2:
•

GBP/USD (1 GBP =1.3 USD),

•

Tour ticket

•

X don’t need to sell the tour for Y

: 13000 USD,


OPTION MARKET
Application in Tourism : Call Option Example
Two companies in Japan: travel agent A, tour operator B
30/05/2016
• A want to buy a Tour (Tokyo - Washington DC)
• on 30/7
• Exchange rate: USD/JPY = 105  high

 the value of JPY is low ( an earthquake is taking place)
• Price of Tour: 1000 USD/person = 105 000 JPY/person