FX and interest-rate risk
Map the exposure before discussing FX or rate instruments
The product name is not the starting point. Amount, currency, timing, and natural offsets come first.
One exposure per row
The register should include notional amount, currency, expected date, certainty, underlying contract, and owner. Keep receivables and payables separate; treat them as a natural offset only when amount and timing genuinely match.
| Amount | Currency | Horizon | Type |
|---|---|---|---|
| USD 1,200,000 | USD | 90 days | Receivable |
| CNY 4,800,000 | CNY | 45 days | Supplier payment |
| HKD 10,000,000 | HKD | 12 months | Floating-rate borrowing |
Translate FX moves into cash impact
For the USD 1.2 million receivable, a 3% move in the functional currency implies a simple cash-value sensitivity of roughly 3% of notional. This linear exercise excludes forward points, transaction costs, tax, and accounting treatment.
Then check timing. A CNY payment in 45 days does not offset a USD receipt in 90 days. If the payment occurs first, interim liquidity is still needed.
For floating debt, record the reset date
If a HKD 10 million floating-rate borrowing rises by 100 basis points for a full year, the simple annualised interest increase is about HKD 100,000. Actual impact depends on drawn balance, reset frequency, fees, and prepayment terms.
Confirm policy authority before choosing an instrument
The company should first define risk tolerance, coverage ratio, approval authority, and review frequency. A register makes exposures visible; whether and how to manage them requires professional advice, product suitability, and applicable regulation.