Trade Thread XVIII: Brace Yourselves. Friday Is Coming.
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02-06-2014, 11:06 AM
Join Date: Sep 2007
Originally Posted by
This is just even more reason to hedge. You can hedge forward to any date, you just buy or sell the currency now so that you get the opposite currency impact later.
For example, if the NHL sold an equivalent amount of Canadian dollars and bought USD forward at the time of the deal, to settle at different times over the next 12 years, on each of the settlement dates they would receive an equal amount of money to the loss that they're incurring. If the amount of Canadian dollars they're receiving next year has devalued by $5m for example, they made the opposite transaction (buying US dollars for an equivalent amount) at the time of the deal, so they would lose $5m on the deal and gain $5m on the trade they placed. No currency impact.
Source: I work for a company that deals in many currencies, and placing trades like this to minimize currency impact is part of my job.
I don't work in currencies, so I won't pretend to understand it all, but I would think this scenario is complicated by the fact that the NHL isn't a single company, but rather 31 companies (30 teams + NHL).
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