FX_Products_Hedging_Enhanced good to read

Ppt

1. Foreign Exchange (FX) Products & Hedging Strategies Analyzing FX Market, Risk Management, and Hedging Techniques

2. Introduction to FX Markets • Definition of FX • Role in global trade & investments • Importance for businesses and investors

3. Global FX Market – Key Statistics • Daily FX Turnover: ~$7.5 Trillion • Major Trading Hubs: London, New York, Singapore • Most Traded Currencies: USD, EUR, JPY, GBP, CNH

4. Oman Economy & FX Market Overview • Oman’s Economy: Oil & gas driven • OMR Pegged to USD at 1 OMR = 2.6008 USD • FX Market in Oman: Import-dependent, USD exposure

5. Global Currency Breakdown • Most Traded Currencies: - USD: 88% - EUR: 31% - JPY: 17% - GBP: 13% - CNH: 7% • Major & Minor Currency Pairs

6. FX Settlement & Transaction Timeline • T+2 Settlement Cycle • Real-time Gross Settlement (RTGS) vs. Continuous Linked Settlement (CLS) • Timeline for FX Transactions: Spot, Forward, Options

7. FX Products for Hedging • Hedging Techniques: Forwards, Options, Swaps • Who Needs Hedging? - Exporters & Importers - MNCs with FX exposure - Investors & Speculators

8. Forward Contracts • Agreement to buy/sell currency at a predetermined rate • Benefits: Protection against adverse currency movements • Example Calculation: USD/OMR forward rate lock-in

9. FX Options & Their Role • Definition: Right but not obligation to trade FX • Types: Call Option (Buy), Put Option (Sell) • Use Case: Hedging unpredictable FX movements

10. Commodity Hedging with FX • Why Commodity Hedging? - Oil & gas, metals, agri-commodities priced in USD - FX fluctuations impact pricing • Hedging Tools: FX Forwards & Options

11. Key Takeaways • FX market is huge & liquid • Hedging helps manage currency risk • Forwards & options are key instruments • Oman’s OMR peg reduces volatility but not FX risk

12. Q&A Open for questions & discussions