Post-Conference Workshop: 16 April 2010, 14.00-17.00
New Approaches for Managing Foreign Exchange and Interest Risk
Jorge Santisteban
Director of Hedging Services
MFX Solutions (USA)
The purpose of this workshop is to provide a detailed overview of currency risk in microfinance, and the tools used to hedge this risk. The workshop leader will explain forward contracts, forward rate agreements (FRAs), and currency and interest rate swaps. Specifically, he will discuss how these derivatives are structured, priced, and their costs/benefits to microfinance investors and institutions. This workshop is designed to be interactive and will use a series of practical examples. Topics to be covered include:
- History of derivatives main events
- What is a currency forward?
- Forward calculation: an example
- Forward pricing: basic formula
- Forward prices and interest rates
- Currency swaps:
- what are they
- what types are available?
- 2 ways to settle swaps
- example for discussion
- Practical examples of a loan
- Forwards vs. futures
- Investor vs. non Investor trading requirements