Building Your Own Hedge Program: A Short Guide to FX & IR Hedging

If your company is exposed to foreign currency or interest rates risk, read this guide.
Companies and corporations are often exposed to market risk. Most of the time, this risk takes the form of volatility in foreign currency exchange rates (FX) and interest rates (IR) – and it’s often serious and substantial. To protect the bottom line, companies like yours need to be able to mitigate the risk in a predictable way. 

This is what hedge programs were created to do.


Hedging focuses on exchanging one risk for another. FX allows companies to protect earnings by converting foreign currency risk to USD risk. IR, helps companies frequently reduce interest expense volatility by exchanging the variable rate on their debt for a fixed rate.

No matter what type of risk you’re trying to hedge – be it FX or IR – the characteristics of a hedge program are largely the same. 

In this brief guide, we’ll look at what it takes to build your own hedge program for mitigating risk for both. Let’s get started.