Visit foreign exchange markets can be tumultuous, and those involved in Euro (EUR) and Shekel (ILS) transactions know that the volatility of the Euro - Shekel is very high.
The volatility ofEUR/ILS creates challenges for companies and individuals with foreign currency obligations. Call Center, investor, freelancer, solo-preneur, retired... everyone is more or less affected by fluctuations on the EUR/ILS market.
However, there are smart strategies for mitigating risk and maximizing reward. In this article, we'll explore a few ways to hedge EUR/ILS volatility.
1. Forward contracts (Forward contracts) to manage Euro - Shekel volatility
Forward contracts are an essential tool for currency management. They enable you to lock in an exchange rate in advance for a future date. This can be particularly useful if you know you'll need a certain quantity of ILS on a specific date.
For example, if you're a French company that has to pay Israeli suppliers in ILS, a forward contract will protect you against unfavorable EUR/ILS fluctuations.
Or if you're a call center that has to pay its employees in ILS, taking out a hedge on the EUR/ILS rate can enable you to secure a favorable and preferential exchange rate.
2. Currency options
Currency options offer additional flexibility. You have the choice, but not the obligation, to buy or sell a currency at a specific exchange rate. Options can be particularly valuable if you want to benefit from favorable rates while limiting your risk in the event of unfavorable variations.
For example, if you're an investor holding ILS assets and you're worried about the EUR falling, a call option would allow you to benefit from higher rates if the EUR rises.
3. Follow trends and use stop-loss orders
For individuals, it may be wise to follow market trends. You may be able to spot good times to trade when the exchange rate is in its favor. However, it's important to use stop-loss orders to limit your losses if the market turns against you. Stop-loss orders are essential to protect your investments and minimize potential losses.
4. Diversify your portfolio to offset Euro - Shekel volatility
Diversification is a key strategy for managing volatility. If you have assets or liabilities in ILS, consider diversifying your portfolio by also having assets or income in EUR or other stable currencies. This can help you spread risk and reduce the impact of EUR/ILS fluctuations on your financial situation.
EUR/ILS volatility is a fact of life in the foreign exchange market. However, with appropriate strategies such as forward contracts, currency options, trend monitoring and diversification, you can mitigate the risks and maximize the benefits of your currency transactions.
It is also essential to keep abreast of economic and political developments that can influence the exchange rate.
For example, we notice that every time there is a war in Israel, the EUR/ILS rate has a strong positive impact.
If you want to take advantage of the best available rate, and control fluctuations, don't hesitate to contact us. As part of our financial support offer, we have several trusted partners and solutions that can optimize your finances.