Hedging Policy & Execution Support
Currency risk in an Indian subsidiary is usually managed in one of two bad ways: not at all, leaving margins hostage to a currency with a long depreciation history and sharp episodic moves; or ad hoc, with hedges placed on instinct, sized by guesswork, and unexplainable to auditors when the accounting questions arrive. Between these sits the discipline regulators, auditors, and parents all actually want: a board-approved policy hedging measured exposure with appropriate instruments under defined authority.
We build that discipline. Exposure is measured properly first — transactional flows, translation effects, and the competitive exposures that never appear on a balance sheet; policy is drafted to board-adoption standard: what gets hedged, in what ratios, with which instruments, under whose authority, reviewed how often; execution is supported with AD banks under the RBI's framework for underlying-based hedging; and the accounting — hedge documentation and effectiveness assessment under Ind AS 109 — is handled from inception, because a hedge that works economically but fails its paperwork creates precisely the P&L noise it was meant to prevent.
What this covers
- Exposure measurement across transactional, translation, and competitive dimensions.
- Board-grade hedging policy: coverage ratios, instrument permissions, authorities, and review cadence.
- Instrument guidance: forwards, options, and swaps matched to exposure shape and cost tolerance.
- AD-bank execution support within the regulatory framework for hedging underlying exposure.
- Hedge-accounting setup: documentation and effectiveness testing under Ind AS 109 from day one.
Who needs this
Indian subsidiaries with import, export, or debt-service currency exposure; group treasurers extending hedging governance to India; and CFOs whose current hedging is either absence or improvisation.
How we deliver
- Exposure measured across transactional, translation, and competitive dimensions.
- Policy drafted to board-adoption standard with authorities and review cadence.
- Execution and hedge-accounting setup supported from the first trade.
Why A2 Consultants
We sit between the treasury logic and the accounting consequence — the policies we draft are executable with Indian AD banks and defensible under Ind AS 109, which is the combination unhedged and improvised programs both lack.
Engagement & what to expect
Policy engagements run five to eight weeks: exposure measured across dimensions, policy drafted with coverage ratios, instruments, and authorities defined, and board adoption supported with the analysis directors need to approve confidently. Implementation follows: AD-bank arrangements, first executions supported, and hedge-accounting documentation established from the opening trade. The ongoing cadence is quarterly — exposure re-measured, policy compliance reviewed, and effectiveness testing maintained. Engagements often begin after a currency event has already cost margin; the better ones begin before it.
Unhedged is a position, and unexplained hedging is a finding — a governed policy is cheaper than either.