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Real format and depth — with data from a fictional company (Manufacturas del Caribe S.A.S.) to show you exactly what you receive.
This company’s data is illustrative and does not correspond to a real case. Not investment advice.
Sample
Confidential Report
ViSFI
Currency Hedging Report
Manufacturas del Caribe S.A.S.
Prepared for the finance management team
Sector: Industrial manufacturing · Machinery imports · Barranquilla, Colombia
Sector: Industrial manufacturing · Machinery imports · Barranquilla, Colombia
This document contains confidential information prepared exclusively for the recipient. Redistribution without authorization is prohibited.
Aug 27, 2026
No. ViSFI-HDG-0031
No. ViSFI-HDG-0031
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Executive summary
You can lock the cost of your dollar payment at $1,885.5M COP — today, for 180 days out
Manufacturas del Caribe is importing machinery for US$450,000, payable in 180 days. Without a hedge, that payment is exposed to peso volatility: it could cost between $1,592M and $2,236M COP depending on which way the rate moves. A forward eliminates that uncertainty and locks the number in today.
Cost locked with forward
$1,885.5M COP
Range without hedge: $1,592M – $2,236M
Exposure
US$450,000
Implied forward
$4,190 / USD
Risk avoided (adverse scenario)
$350M COP
This report derives the theoretical forward under covered interest rate parity, contrasts that figure against the probable market scenarios if the company decides not to hedge, evaluates the swap alternative for short-term liquidity needs, and closes with a concrete structure recommendation — not just a number, but which instrument to use and why.
Independence note: the forward calculated here uses market rates from the day of the report. If your bank quotes a materially different forward, that difference — called the bank spread — is exactly what page 6 teaches you to identify and negotiate.
02 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Methodology and assumptions — part 1 of 2
The forward isn’t a bet — it’s interest-rate arithmetic
A currency forward carries no prediction about where the peso is headed. It’s the mechanical result of covered interest rate parity (CIP): the point at which no one can make risk-free money by borrowing in one currency and investing in another.
Covered interest rate parity — CIP. Forward = Spot × (1 + i_COP × t) / (1 + i_USD × t). The destination currency’s rate (COP, where payment is made) goes in the numerator; the origin currency’s rate (USD, the one needed) goes in the denominator. With Spot = $4,100, i_COP = 9.5% annual, i_USD = 5.0% annual, and t = 0.5 years (180 days), the theoretical forward is $4,190 per dollar.
Why COP carries a forward premium. Colombia has a higher interest rate than the United States — that’s the differential that compensates whoever lends in pesos for the local risk and inflation. That same differential is what makes the future dollar cost more pesos than today’s dollar: it isn’t speculation, it’s the opportunity cost of money in each currency.
Uncovered interest rate parity — UIP (for the unhedged base scenario). If the company decides not to hedge, the exchange rate expected in 180 days — not today’s — is the correct comparison point: Expected future spot = Spot × (1 + rate differential × t) = $4,100 × (1 + 4.5% × 0.5) = $4,192.25. By construction, this is nearly identical to the forward — the difference between the two is the true “premium” or “penalty” of staying unhedged.
| Variable | Value used | Source |
|---|---|---|
| Spot USD/COP | $4,100 | Spot market, report date |
| COP rate (i_dest) | 9.5% E.A. | IBR curve / short-term TES |
| USD rate (i_origin) | 5.0% E.A. | SOFR + corporate funding curve |
| Term | 180 days (0.5 years) | Contractual supplier payment date |
| Theoretical forward (CIP) | $4,190.0 | Report calculation |
Each of these rates is an editable field in your review session with me — your bank’s forward may differ from the theoretical one, and that difference is exactly what we negotiate.
03 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Methodology and assumptions — part 2 of 2
How a treasurer thinks — not just a bank
A forward locks in a cost. A swap solves a different problem: a timing mismatch between currencies, when a company holds cash in one and needs it in another, temporarily.
Simple forward — the structure recommended here. Manufacturas del Caribe has no liquidity mismatch: it simply needs pesos available to pay dollars in 180 days. A forward purchase of USD at $4,190 is the simplest and cheapest structure for this case — no exchange of principal today, only net settlement on the agreed date.
Swap — when it would apply. If the company held US$200,000 today from an export advance but needed pesos now for payroll, and needed those dollars again in 90 days, a swap would let it convert those dollars to pesos today and reverse the operation later — without selling the dollar asset in the spot market twice. That isn’t Manufacturas del Caribe’s case, but it’s the question every treasurer should ask before choosing an instrument.
Real cost of a swap — it isn’t free. A swap’s cost isn’t the nominal difference between the two legs, but the opportunity cost of holding the currency delivered today: Amount delivered today × (1 + rate of that currency × t) − amount received back. In practice, that cost tends to run 0.8%–1.2% above the pure rate differential — a structural residual from the bank spread, not a calculation error.
| Criterion | Forward (recommended) | Swap |
|---|---|---|
| Solves | Future cost certainty | Current liquidity mismatch |
| Principal exchange | No, net settlement only | Yes, on both legs |
| Typical cost | Pure rate differential | Differential + 0.8%–1.2% |
| Applies here | Yes | No — no liquidity mismatch |
Why this matters: using a swap for a forward problem — or vice versa — is the most common and most expensive structuring error in corporate treasury. ViSFI’s free calculator models both cases separately for exactly this reason.
04 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Detailed analysis — scenarios and sensitivity
What happens if you don’t hedge, in five scenarios
| Scenario | Spot in 180 days | Total cost | vs. locked forward |
|---|---|---|---|
| Very favorable (−2σ) | $3,537.5 | 1,591.9 | −293.6 |
| Favorable (−1σ) | $3,850.4 | 1,732.7 | −152.8 |
| Base / expected | $4,192.3 | 1,886.5 | +1.0 |
| Adverse (+1σ) | $4,564.4 | 2,054.0 | +168.5 |
| Very adverse (+2σ) | $4,967.9 | 2,235.6 | +350.1 |
Sensitivity — forward to spot and rate differential
| Δ 3.5% | Δ 4.5% | Δ 5.5% | |
|---|---|---|---|
| Spot $3,950 | 4,019 | 4,038 | 4,058 |
| Spot $4,100 | 4,172 | 4,190 | 4,211 |
| Spot $4,250 | 4,325 | 4,343 | 4,365 |
Composition of total unhedged cost
The forward doesn’t eliminate the rate differential — that’s already priced in — it eliminates the ±$350M band that comes from spot volatility.
05 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Ratios and market comparison
How competitive is your bank’s quote?
The theoretical forward is the reference point — not necessarily the price your bank will give you. The difference between the two is the spread, and here’s how to measure it.
Theoretical forward (CIP)
$4,190.0
Implied forward points
90.0 COP
Typical Colombia bank spread
15–40 bps
| Source | Quoted forward | Spread vs. theoretical |
|---|---|---|
| Theoretical forward (CIP) | $4,190.0 | — |
| Corporate Bank A (reference) | $4,198.5 | +0.20% |
| Corporate Bank B (reference) | $4,207.0 | +0.41% |
| Treasury desk — reasonable range | $4,192 – $4,202 | +0.05% to +0.29% |
A spread of up to 0.3% over the theoretical forward is normal and reflects the bank’s margin. Above 0.5% on a deal of this size, it’s worth requesting a second quote — I’ll show you how to compare in the review session.
06 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Key risks
What a forward doesn’t eliminate
Hedging doesn’t mean eliminating all risk — it means trading an uncertain risk for a known one. These are the ones that remain.
Bank counterparty risk
Low
Opportunity cost if COP strengthens
Up to $294M
Amount risk (over/under-hedging)
Moderate
Opportunity cost — the risk you do take on by hedging. If the peso strengthens (−2σ scenario, page 5), Manufacturas del Caribe would have paid $293.6M COP less without a hedge. The forward isn’t free: it’s the price of eliminating uncertainty, not of guaranteeing the best possible outcome.
Amount risk. If the supplier’s final invoice changes — due to last-minute adjustments to the purchase order — the forward ends up over- or under-sized relative to the actual exposure. It’s worth confirming the exact amount before closing the deal, not an estimated figure.
Counterparty risk. A forward is a bilateral contract with a bank — if the deal is struck with a low-capital institution, there’s a (low but real) risk the counterparty fails to perform on the settlement date. With banks supervised by Colombia’s Superintendencia Financiera, this risk is marginal.
Date risk. If the payment date to the supplier shifts, the forward may require a “roll” (extension) to a new maturity, which reopens the bank spread described on page 6.
How to use this page: it isn’t a reason not to hedge — it’s the list of conditions to put in writing with the supplier and the bank before closing the forward.
07 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Recommendations
What I would do in your place
A report that ends in a number is only half the work. This is what I would negotiate if this were my company.
- Close a simple forward for 100% of the confirmed amount, not an estimateWith the purchase order already signed, there’s no reason to leave exposure open — a forward for US$450,000 eliminates the ±$350M range identified on page 5.
- Request quotes from at least two banks before closingWith the theoretical forward of $4,190 as an anchor (p. 6), a spread above 0.5% on a deal this size justifies a second quote.
- Put the “roll” clause with the bank in writing before signingIf there’s a chance the supplier moves the delivery date, negotiate the extension terms today — not when it’s already urgent.
Carlos Fernando Viveros García
Founder, ViSFI · 15+ years in institutional capital marketscriteriofinanciero.com.co
hola@criteriofinanciero.com.co
hola@criteriofinanciero.com.co
08 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
How this report was built
The CRITERIO Model, applied step by step
Every ViSFI report follows the same eight-step sequence — not as brand decoration, but as the actual order in which the decisions behind this document were made.
| Step | What it meant here |
|---|---|
| C — Comprehend | Discovery session: exact amount, payment date, supplier’s invoicing currency. |
| R — Reason | Distinguishing forward from swap before calculating anything — the wrong instrument costs more than a bad price. |
| I — Integrate AI | Volatility and sensitivity scenarios run with AI assistance, manually validated against the rate parity on page 3. |
| T — Take the decision | Recommending a simple forward for 100% of the exposure — not a partial hedge that leaves risk open for no reason. |
| E — Execute | This document: every number traceable to its source, every rate editable in the review session. |
| R — Review | Roll clause put in writing (recommendation 3) — a forward with no date-contingency plan is a new risk, not a solution. |
| I — Innovate | Explicit forward vs. swap comparison included because it’s the most common and least explained structuring error in SME treasury. |
| O — Optimize the impact | The goal isn’t just the locked-in number — it’s that you can negotiate with your bank from an informed position. |
This is the same sequence you’ll see in ViSFI’s Daily Briefing every day — applied here, once, to your specific currency exposure.
09 / 10
ViSFI
Hedging Report · Manufacturas del Caribe S.A.S.
Appendix · Glossary
So you don’t have to look it up elsewhere
You shouldn’t have to Google these terms or ask anyone else about your own currency exposure. They’re here, in the same document.
- Currency forward
- A contract to buy or sell a currency at a price fixed today, settling on a future date. It eliminates uncertainty about the cost, not the existence of the rate differential.
- Covered interest rate parity (CIP)
- The principle stating that the “correct” forward between two currencies is determined entirely by their relative interest rates — not by a prediction about the future.
- Uncovered interest rate parity (UIP)
- The expectation that the future exchange rate will move, on average, to offset the interest rate differential between two countries — the correct comparison point for deciding whether hedging is worth it.
- Currency swap
- A temporary exchange of one currency for another today, with a commitment to reverse the transaction on a future date. It solves a liquidity problem, not future exchange-rate exposure.
- Bank spread (forward points)
- The difference between the theoretical forward calculated by rate parity and the price a bank actually quotes — the intermediary’s margin.
This report was generated using ViSFI’s CRITERIO framework and reviewed by Carlos Fernando Viveros García. It is a professional estimate — it does not constitute a financial audit or a binding offer to buy or sell derivative instruments.
10 / 10
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