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Pre-Congress Workshop, May 24, 2010
1:00 - 4:00 p.m. (Registration from 12:30 p.m. Refreshments will be served at an appropriate juncture during the workshop)
New Approaches for Managing and Mitigating Foreign Exchange Risk
Anmol Chandan
Director of Operations
MFX Solutions
Foreign exchange (FX) risk is a foremost concern for MIVs and MFIs.
Attend this workshop to understand FX risk and learn ways in which to manage and mitigate it. During the course of this in-depth workshop, FX experts will address:
- FX risk in microfinance and the impact on MIVs, MFIs, and networks of MFIs
- Identifying, measuring, and managing FX risk
- Key FX risk factors
- Importance of FX risk policy and risk strategy
- Available hedging structures and how best to apply them
- Other risk mitigating structures including back to back loans and loan guarantees
- Hedge counterparty management and documentation
- Practical limitations of managing FX risk: creditworthiness, legal and regulatory considerations, availability of forward and options markets for different currencies
- ISDA document governing derivatives transactions
- Identification of appropriate counterparties for specific transactions
- Negotiating counterparty relationships
- Hedge execution and management process
- Hedge transaction process
- Hedge documentation process; terms sheets, transaction confirmations
- Timing and planning: investment closing; market liquidity challenges
- Ongoing hedge and loan valuation, reporting and analysis
- Impact of FX and hedging on financial statements
- Volatility in financial statements caused by hedging
- Description of hedge accounting
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