Map foreign exchange exposure and outline a hedging approach
A clear view of where currency risk sits in the business and practical options to reduce it.
The prompt
Help me understand our foreign exchange (FX) exposure and outline a hedging approach.
Reporting currency: [CURRENCY]
Revenue by currency: [AMOUNTS, timing, contract lengths]
Costs by currency: [payroll, suppliers, rent]
Balance sheet items in foreign currency: [cash, receivables, payables, intercompany loans, debt]
Foreign subsidiaries and net investment: [DETAILS]
Current hedging and policy, if any: [DETAILS]
Risk appetite: [e.g. "protect budget rate on 70% of next 12 months"]
Steps:
1. Classify exposure as transactional, translational, and economic, with amounts by currency.
2. Net natural hedges (revenue and costs in the same currency).
3. Show the impact of a 5% and 10% move in each major currency on revenue, EBITDA, and cash.
4. Outline hedging options (natural hedges, pricing in local currency, forwards, options, matching debt) with pros, cons, and complexity.
5. Note when hedge accounting matters and what documentation it typically requires.
Return:
- An exposure table by currency.
- A sensitivity table.
- A draft hedging policy outline: objectives, scope, hedge ratios, instruments allowed, counterparties, approval limits, reporting.
- Questions for our bank and auditors.
This is general information, not trading or investment advice; confirm instruments and accounting treatment with your bank, auditors, and qualified advisors.
Highlighted [brackets] are blanks to replace with your own details.
Fill in the blanks and use this promptMore Finance & Accounting prompts
What to fill in
- CURRENCY
- AMOUNTS, timing, contract lengths
- payroll, suppliers, rent
- cash, receivables, payables, intercompany loans, debt
- DETAILS
- e.g. "protect budget rate on 70% of next 12 months"
How this prompt is built
This prompt follows the RTF structure (Role, Task, Format). RTF tells the model who to be, what to do and what shape the answer should take. It is the quickest structure that still gives noticeably better results than a bare request.
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