Eurozone and Hedge ratio: Difference between pages

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''The euro.''
1.  ''Hedging instruments.''


The Eurozone is the collective name for the 19 countries adopting European Monetary Union (EMU) in full.
The proportion of a hedging instrument required to hedge an underlying position, compared with the amount of the underlying position itself.  
Sometimes written 'Euro zone', 'eurozone' or 'Euro-zone'.


More formally known as the 'euro area' and more informally as 'euroland'.


'''Example'''


The 19 countries in the euro area are:
If four options are required to hedge a position of one unit of the underlying asset:  


Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.
Hedge ratio = ¼


= 0.25.


The nine European Union (EU) countries which are not in the euro area are:


Bulgaria, Croatia, the Czech Republic, Denmark, Hungary, Poland, Romania, Sweden and the United Kingdom (UK).
2. ''Risk management.''


The proportion of a risk exposure that an organisation chooses to hedge.


====Brexit====
Also known as a hedging ratio.
A referendum in the UK in June 2016 resulted in a vote for the UK to begin the process of leaving the EU.  




== See also ==
:<span style="color:#4B0082">'''''Corporates increase FX hedging'''''</span>
* [[Bank supervision]]
 
* [[Brexit]]
:“While there will always be some [corporates] that don’t hedge their FX risk at all, those that haven’t are now considering doing so given recent market volatility and negative currency impacts.
* [[Central bank]]
 
* [[Core countries]]
:“Those corporates that already had formal hedging programmes in place are now increasing their hedge ratios to protect their bottom lines.”
* [[ESCB]]
* [[Euro Stoxx 50]]
* [[Eurobond]]
* [[European Central Bank]]
* [[European Financial Stability Facility]]
* [[European Monetary Union]]
* [[European Union]]
* [[Eurosystem]]
* [[Grexit]]
* [[Periphery countries]]


:''Eric Huttman, CEO at MillTechFX, The Treasurer online - 14 October 2022.''




==== Currencies of EU countries not in the euro area ====
== See also ==
* [[BGN]]
* [[Bottom line]]
* [[HRK]]
* [[Corporate]]
* [[CZK]]
* [[Exposure]]
* [[DKK]]
* [[Foreign exchange risk]]
* [[HUF]]
* [[FX]]
* [[PLN]]
* [[Hedge ]]
* [[RON]]
* [[Hedge accounting]]
* [[SEK]]
* [[Hedging]]
* [[GBP]]
* [[Risk management]]
* [[Volatility]]


[[Category:The_business_context]]
[[Category:Manage_risks]]

Latest revision as of 21:34, 13 October 2022

1. Hedging instruments.

The proportion of a hedging instrument required to hedge an underlying position, compared with the amount of the underlying position itself.


Example

If four options are required to hedge a position of one unit of the underlying asset:

Hedge ratio = ¼

= 0.25.


2. Risk management.

The proportion of a risk exposure that an organisation chooses to hedge.

Also known as a hedging ratio.


Corporates increase FX hedging
“While there will always be some [corporates] that don’t hedge their FX risk at all, those that haven’t are now considering doing so given recent market volatility and negative currency impacts.
“Those corporates that already had formal hedging programmes in place are now increasing their hedge ratios to protect their bottom lines.”
Eric Huttman, CEO at MillTechFX, The Treasurer online - 14 October 2022.


See also

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