FX hedge
[/ˌɛf ˈɛks hɛdʒ/]
nounpl: FX hedges
proteção cambial
1. A financial strategy used to protect against unfavorable exchange rate fluctuations by taking an offsetting position in foreign currency derivatives or forward contracts
The company implemented an FX hedge to protect its European revenue from dollar appreciation.
A empresa implementou uma proteção cambial para proteger sua receita europeia da apreciação do dólar.
2. A derivative instrument or financial arrangement designed to minimize currency risk exposure in international business transactions
The multinational corporation used currency forwards as an FX hedge against peso volatility.
A corporação multinacional usou contratos a termo como proteção cambial contra a volatilidade do peso.
FX hedging is a standard practice in international business in both Brazil and the USA. In Brazil, due to historical currency volatility and the importance of foreign trade, FX hedging is particularly prevalent among exporters and companies with dollar-denominated debt. The term 'hedge cambial' is widely understood in São Paulo's financial sector, while 'proteção cambial' is the more formal regulatory terminology used by the Central Bank of Brazil (Banco Central do Brasil).
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