Due to the interconnected nature of the global economy, innovation sector companies, from early-stage to large multinational, find themselves increasingly exposed to currency risk.
An important first step in managing this risk involves incorporating foreign exchange (FX) budget rates to the overseas planning, budgeting, and contract negotiation processes. In this report published by SVB Foreign Exchange, we:
- define budget rates
- discuss why they are important
- outline key implementation considerations
- conclude with recommendations to help inform your decision-making process
This article is intended for US audiences only.
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Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.
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