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Dealing with Foreign Exchange Fluctuations
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the deal
#1 Posted : Saturday, January 22, 2011 4:46:06 PM
Rank: Elder


Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Hi Comrades,

What do you think is the best way of dealing with foreign exchange fluctuations especially for importers?
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drake
#2 Posted : Sunday, January 23, 2011 2:32:40 PM
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Joined: 8/8/2009
Posts: 170
the deal wrote:
Hi Comrades,

What do you think is the best way of dealing with foreign exchange fluctuations especially for importers?



How much are we talking? Please post some figures for "guidance"... a range would do fine too!
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erifloss
#3 Posted : Sunday, January 23, 2011 2:48:21 PM
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Joined: 6/21/2010
Posts: 514
Location: Nairobi
First, open a foreign currency account in the currency you mostly deal with.
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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qw25041985
#4 Posted : Sunday, January 23, 2011 2:55:11 PM
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Joined: 5/9/2010
Posts: 1,418
Location: Nai
lol ! i make my money from foreign exchange flactuations ( fx dealer) so u bet i want them to continue flactuatin...lol !
Your future depends on your dreams so go to sleep !
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erifloss
#5 Posted : Sunday, January 23, 2011 3:54:32 PM
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Location: Nairobi
qw25041985 wrote:
lol ! i make my money from foreign exchange flactuations ( fx dealer) so u bet i want them to continue flactuatin...lol !

@qw, everything is not always about you @the deal asked for suggestions not gloating & that's what we should try to do!
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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the deal
#6 Posted : Sunday, January 23, 2011 6:15:57 PM
Rank: Elder


Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
@Drake and Erfloss and Mr Know everything and master of none aka qw...lol..we are talking of the SA Rand vs Kenyan Shilling...right now its at a 2 year high...my headache is:

1. A strong Rand vs Shilling makes my products less competitive and increases my shipping costs but on the other hand i make forex gains if the Rand goes down

2. A weak shilling Vs Rand makes my products way cheaper than the competition...i can use as a weapon since price wars are the thing to go.

Now experts where do you see the Rand vs Shilling in 2011

I prefer the Rand Vs the Shilling at 11, currently the exchange rate i'm using is 11.5
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chaliwong
#7 Posted : Sunday, January 23, 2011 6:48:04 PM
Rank: New-farer


Joined: 1/10/2010
Posts: 73
Location: kenya
Why not do your international trades in dollars(USD)only.
With a dollar Account and regular transactions($3000 And above)you can negotiate the rate with your bank before you transact.

Another way, If all your turnover from your international trades go through your local business account back home, you can still negotiate the rate but you have to know in advance when the foreign money is coming in because negotiation has to be done in advance.

Another advantage of doing foreign transactions through an account is there are no commissions.
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drake
#8 Posted : Monday, January 24, 2011 8:36:22 AM
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Joined: 8/8/2009
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Deacons Kenya are in the same predicament. They manage their exposure to ZAR by hedging...(w/Barclays, I believe).

Depending on the gross amounts you deal in, this may be an option for you too i.e. a forward contract to exchange your future cash-flows at a certain/known price/rate.

The variable factors include but are not limited to the (1) Spot rate at the time of entering the hedge and (2) Interest rate differential (S.A vs Kenya) that will be used to derive forward points...you can keep an eye on these two factors and make your decisions on when to hedge accordingly...

I believe you are familiar with the concept as indicated on the KNAL thread..

the deal wrote:
KQ can live with oil price´s above 100 U$ as long as they´re stable just like now because of hedges...what they cant live with are oil price swings i.e 140 then 35 like in 2008 cos they will have hedged somewhere at 70 and if fuel is at 35 at that time it means they will be making losses however this is a thing of the past too since KQ has adopted revolving hedges i.e they hedge for a short period of time.


Over time, you should achieve a "smoother" rate...
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kizee1
#9 Posted : Monday, January 24, 2011 9:18:56 AM
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Location: nairobi
the deal wrote:
@Drake and Erfloss and Mr Know everything and master of none aka qw...lol..we are talking of the SA Rand vs Kenyan Shilling...right now its at a 2 year high...my headache is:

1. A strong Rand vs Shilling makes my products less competitive and increases my shipping costs but on the other hand i make forex gains if the Rand goes down

2. A weak shilling Vs Rand makes my products way cheaper than the competition...i can use as a weapon since price wars are the thing to go.

Now experts where do you see the Rand vs Shilling in 2011

I prefer the Rand Vs the Shilling at 11, currently the exchange rate i'm using is 11.5



as drake said a good hedge is a forward..however a forward only gives you an edge when the mkt is below the prevailing spot rate..a forward is easy to understand and wont cost you anything but it offers u limited protection...u cud venture into the murky world of options and get complete(sic) protection...since u seem to be an importer u wud be buyin calls and thus wud pay a premium..but then again u cud get into some sort of synthetic structures wherein u pay no premium...
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the deal
#10 Posted : Monday, January 24, 2011 12:03:19 PM
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Posts: 4,534
Location: Windhoek/Nairobbery
Thanx guys for your contributions lemme digest this and see whats best for me.
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kizee1
#11 Posted : Monday, January 24, 2011 1:49:34 PM
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the deal

also remember ur options depend on what amounts ur transacting in
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the deal
#12 Posted : Monday, February 21, 2011 1:41:34 PM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Thanks to everyone who contributed on this thread im just from Barclays Bank Kenya, and they have agreed i can hedge the Rand vs Shilling all i need to do is open a business account with them...the Wazua spirit lives.
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kizee1
#13 Posted : Monday, February 21, 2011 2:50:54 PM
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the deal wrote:
Thanks to everyone who contributed on this thread im just from Barclays Bank Kenya, and they have agreed i can hedge the Rand vs Shilling all i need to do is open a business account with them...the Wazua spirit lives.


i see...so what options did they give you?
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Cde Monomotapa
#14 Posted : Monday, February 21, 2011 11:54:16 PM
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Joined: 1/13/2011
Posts: 5,964
A slight deviation but equally important to fellow portfolio investors. A hedge against USD/KES flactuations is to invest on www.zse.co.zw - zimbabwe stock Ex where the stocks r listed in USD. Thus in times like these of political noise n weak shilling ur networth goes up upon conversion.
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drake
#15 Posted : Tuesday, February 22, 2011 1:20:41 AM
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Posts: 170
the deal wrote:
im just from Barclays Bank Kenya, and they have agreed i can hedge the Rand vs Shilling all i need to do is open a business account with them...the Wazua spirit lives.


Barclays owe me commish Think
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youcan'tstopusnow
#16 Posted : Tuesday, February 22, 2011 7:45:25 AM
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Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
Cde, the ZSE only trades for 1.5 hours a day?
GOD BLESS YOUR LIFE
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qw25041985
#17 Posted : Tuesday, February 22, 2011 7:51:13 AM
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Joined: 5/9/2010
Posts: 1,418
Location: Nai
youcan'tstopusnow wrote:
Cde, the ZSE only trades for 1.5 hours a day?


@ Y . stop making us laugh.what kind of money can be made in such a short-time ????Its a fully fledged stock exchange !!!!
Your future depends on your dreams so go to sleep !
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youcan'tstopusnow
#18 Posted : Tuesday, February 22, 2011 7:59:56 AM
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qw, if I was trying to make people laugh, I would have posted this:
qw25041985 wrote:
@ youcan'tstopusnow . hahahahah. i wish i was able to convince @ stockmaster to pump money into access kenya coz right now he would have been 23% up in his portfolio and January hasnt ended.
i still reiterate that you guyz buy Access Kenya for a speculative play.The stock is currently up 23% in a couple of weeks.If you dnt get in at 16.00 thereof forget it because a burst from 16.00 will push the stock upto 24.00 and buying from 16.00 will be cashing a price which is very dangerous.
ACCESS KENYA IS A BIG IFNOT BIGGER BUYYYYYYYYYYYYYYYYYYY !!!!!!!!!!!!

GOD BLESS YOUR LIFE
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youcan'tstopusnow
#19 Posted : Tuesday, February 22, 2011 8:01:58 AM
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Joined: 3/24/2010
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But I am not trying to make people laugh. The ZSE website says that it is open from 10am to 11.30 am
GOD BLESS YOUR LIFE
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qw25041985
#20 Posted : Tuesday, February 22, 2011 8:04:07 AM
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Joined: 5/9/2010
Posts: 1,418
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@ Y !!! Come on man....i know u are a mature guy ....where in this World does a stock exchange w/ a turnover billions trade 1.5 hours per day....Or maybe you wrote it in ur sleep..or hadnt woken up well....
What ever the reason even a primary school pupils knows thats stock exchanges OPEN AND TRADE the whole day !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Your future depends on your dreams so go to sleep !
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