Hedging

A hedge works like insurance: any loss on the original exposure is offset, fully or partly, by a gain on the hedge. The aim is to reduce uncertainty, not to make a profit.

Common hedging tools:

• Forward contracts: lock in an exchange rate for a future payment or receipt.
• Futures: standardised exchange-traded contracts.
• Options: the right to buy (call) or sell (put) at a set price, protecting against adverse moves while keeping upside, in return for a premium.
• Swaps: exchange interest or currency cash flows to convert exposures.
• Natural hedges: matching foreign currency income with foreign currency expenses, or borrowing in the currency of revenue.

Hedging has costs: forward premiums, option premiums and bank margins, and an opportunity cost if rates move favourably. An imperfect match between the hedge and the exposure leaves basis risk.

In Nepal, hedging markets are limited. Banks offer forwards and swaps within NRB's foreign exchange directives, and the peg with the Indian rupee removes most exchange risk in trade with India. Hedging is distinct from speculation, which takes a position to profit from expected price movements.

हेजिङ बिमाजस्तै हो: मूल जोखिममा हुने नोक्सानी हेजबाट हुने लाभले पूर्ण वा आंशिक रूपमा पूर्ति गर्छ। उद्देश्य नाफा होइन, अनिश्चितता घटाउनु हो।

साधनहरू: फरवार्ड (भविष्यको दर तय), फ्युचर्स, अप्सन (प्रिमियम तिरी किन्ने/बेच्ने अधिकार), स्वाप र प्राकृतिक हेज (विदेशी मुद्राको आय र खर्च मिलाउने)।

हेजिङमा प्रिमियम, बैंक मार्जिन र दर अनुकूल भए गुमाउने अवसर लागत हुन्छ। हेज र जोखिम पूर्ण नमिले आधार जोखिम (basis risk) रहन्छ। नेपालमा हेजिङ बजार सीमित छ; बैंकले नेपाल राष्ट्र बैंकको निर्देशनभित्र फरवार्ड र स्वाप दिन्छन्। सट्टेबाजी (speculation) हेजिङभन्दा फरक हो।