Hand in hand: currency markets and medical companies strike winning deals for medical equipment

Why are so many medical companies and their clients interested in buying/selling goods through foreign exchange markets?

Today, there is a lot of information on the Internet that the currency market is a game of chance. However, most major medical companies still work with him. Why do some companies see this benefit and get it, while others are afraid of the foreign exchange markets?

Here, rather, inexperience or unwillingness to delve into the system itself plays a big role. Companies come to the international currency market and begin to "jump" in profit depending on the rate fluctuations. A deal made today may turn out to be a winning one, because additional money has appeared. And tomorrow the buyer may incur losses, which leads to a bad deal.

Such jumps are not at all interesting for large companies. After all, for example, for medical companies, not only the purchase of equipment, but also other costs depend on the exchange rate. It is important for them to plan the real cost of the purchased goods.

Yes, large businesses always have analytical departments that can at least approximately predict the future course. However, in practice, their predictions do not always work, and uncertainty still remains.

Foreign exchange hedging: protection from adverse exchange rates

How then can you protect yourself so that the purchase / sale of goods does not affect the financial position of the company? So that the total expenses and profits in foreign currency do not depend on the exchange rate? Most large medical firms in such cases use currency risk hedging. That is, they protect the current transaction from unfavorable movements in exchange rates.

How does this happen?

When concluding a transaction, companies fix the current value of this product by making a purchase or sale on the international foreign exchange market. This leads to the avoidance of any risk associated with price fluctuations. And the entrepreneur or analytical department can easily calculate in advance the cost of the goods, the expected profit, etc.

Any transaction on the foreign exchange market is based on the principle of margin trading. This approach is safe, and therefore quite popular among large companies, including medical ones. Thanks to him, it becomes possible to secure your capital by investing in advance only a 10th part of the cost of the purchased goods. That is, you can buy equipment for 100 thousand euros, and pay the broker as a deposit about 10 thousand dollars.

For the seller, this approach also remains beneficial, as it can increase the volume of transactions for the same capital, while reducing unnecessary overhead costs.

What are the benefits of hedging the foreign exchange market

As a result, hedging currency risk provides the following benefits:

• allows you not to involve large funds from the company in the transaction;
• gives the opportunity to sell foreign currency that the company will receive in the future.

Moreover, for both parties, such a deal will be beneficial. For the seller, the risk is limited with a decrease in the price of products, and for the buyer - with a possible increase in it. To make such a transaction, it is enough to open a currency position on the trading account before the money conversion operation takes place.

It is important for an importer to buy foreign currency, so he worries about opening a foreign currency buy position in advance, in order to close it when the real transaction occurs.

The exporter needs to sell the currency, so he also opens a currency position (sell only), and then closes it when the real deal is made. Both parties can do all this in their bank.

International currency market – opportunity to protect yourself

The international currency market is not just a platform for international financial relations. This is an opportunity to protect yourself when receiving or selling a product / product at a price controlled by the parties.

This is not a game of luck, but a stable place to make big deals. And not only brokers speak about it, but also numbers. Now, more than a trillion dollars a day are being processed on the international currency market! Doesn't that speak to the trust of the customers who use this market?

So now it's up to you if you want to:

• secure your trades through margin trading;
• work with leading companies through international currency markets;
• conduct transactions at a price that suits you.

All this is absolutely real. If you need to make an offer/purchase profitable and stable, it is enough just to pass them through the international currency markets.