Such a Stupid Question – BEC

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  • #191716
    Anonymous
    Inactive

    Okay, seriously please don’t laugh at me for this one but my brain cannot figure this out (and for some reason I can’t find the answer to this basic question anywhere):

    Foreign currency hedges (forwards and futures), when are they entered into? What I mean is at what time. So, if I have a foreign payable of $1,000,000 and am nervous about the dollar depreciating against that foreign currency do I enter into the futures hedge the day I record the payable? If not then I can’t see where the hedge could offset the loss (if it were to happen).

    Again, dumbest question ever but I can’t for the life of me find the answer to this…

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  • #643834
    musicamor
    Member

    You typically enter into hedges of that nature before you transact. One would reasonably plan for an arrangement of this nature and have something in place before originating a transaction.

    Texas CPA - licensed in 2012!!!

    #643835
    Anonymous
    Inactive

    That helps, thank you. I hate assuming and just needed some clarification.

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