The formula
Hedged = Invoice ÷ Forward; Open = Invoice ÷ Scenario spot; Regret = Open − Hedged per scenario
Rates here are quoted as foreign units per one unit of your base currency, so a lower rate means your currency weakened and the invoice costs more. The hedge fixes the divisor; staying open lets the market choose it on payment day.
The comparison deliberately prices regret in both directions: the hedger’s regret when the rate improves, and the open payer’s regret when it deteriorates. A sound policy accepts hedger’s regret as the known cost of certainty — the alternative is asymmetric: a favourable move improves margin, an adverse one can erase it.
How to use this calculator
- 1
Fix the invoice amount and date
The foreign-currency amount and when it falls due — the tenor drives the forward rate you can get.
- 2
Obtain a real forward or hold rate
A live quote for your tenor, not an estimate. The Forward Rate Calculator sanity-checks it against parity.
- 3
Set two honest scenarios
Use levels the pair has actually reached within a similar window — a realistic adverse case and a realistic favourable case.
- 4
Decide on margin, not prediction
If the adverse open outcome would materially damage the order’s margin, certainty is worth its cost. If both outcomes are absorbable, running open is a legitimate choice.
Partial hedging: the practical middle
The decision is rarely all-or-nothing. Hedging half the invoice fixes half the cost and leaves half exposed — halving both the worst case and the hedger’s regret. Layered approaches are common in corporate policy: cover 50% at order, another 25% mid-production, and leave the remainder open, so the blended rate averages across the window instead of betting on a single day.
Run this calculator on the open portion only to see the residual risk after a partial hedge. The right ratio is a margin question: thin-margin importers tend toward 75–100% coverage on large orders; high-margin businesses can afford to leave more open and save the carry cost.
What the model leaves out — deliberately
Forwards carry obligations: you must deliver on the date even if the order is cancelled, and providers may require collateral or margin for longer tenors. Rate holds on payment platforms avoid collateral but cover shorter windows. Neither cost appears in the rate comparison, and both belong in the final decision.
The model also excludes the probability of each scenario, on purpose. Assigning probabilities turns a hedging decision into a forecast, and the forecast record of corporates — and professionals — argues for humility. The scenario range answers the only question hedging can answer: can I live with the worst case? If not, hedge it away.
Common use cases
Large order decisions
Price the hedge-or-open branches before committing a deposit on a major purchase order.
Setting hedge ratios
Run the open remainder after a partial hedge to size the residual risk.
Policy calibration
Test historical scenarios to set the exposure threshold above which hedging is mandatory.
Explaining hedge costs internally
Show stakeholders the certainty being bought when a hedge underperforms hindsight.
Automate this with the API
Pull a live indicative quote to use as the executable branch of the comparison.
curl "https://keybs.io/api/v1/tools/quote/live?from=USD&to=CNY&amount=50000" \ -H "x-api-key: YOUR_FREE_KEY"Free Tools API docs and key registration
Frequently asked questions
The rate moved in my favour after I hedged — did I lose money?
You paid the difference between the forward and the realised spot, and received certainty in exchange. That is the hedge working as designed, not a loss of judgement. Evaluating hedges against hindsight guarantees regret; evaluate them against the risk you carried when the decision was made.
When is running open the right call?
When the worst realistic outcome is absorbable: small invoices, short windows, stable pairs, or margins thick enough to take the adverse case without damage. Running open becomes a problem when it is a default rather than a decision — the point of this calculator is to make it a decision.
How do I choose realistic scenario rates?
Look at the pair’s realised range over windows matching your tenor — the worst and best 90-day moves of the last three years bracket most outcomes. Emerging-market pairs justify wider scenarios than majors. Avoid round-number optimism; the market does not care about your budget rate.
What if my invoice date is uncertain?
Date uncertainty argues for instruments with flexibility: rate holds with defined windows, or forwards with delivery windows rather than fixed dates where available. A forward that matures before the invoice arrives leaves you holding currency; one that matures after leaves you unhedged at payment. Price the flexibility into the comparison.
Do I need a hedging programme or just occasional forwards?
Frequency decides. One large foreign invoice a quarter is handled deal-by-deal with this calculator. Continuous import flows justify a standing policy — thresholds, ratios and tenors — so decisions are consistent rather than mood-dependent. The treasury Academy guides cover the policy layer.
What does KeyBS Pay offer for this decision?
Committed quotes: the executable rate, disclosed fee (from 1.5%, route-dependent) and exact receive amount are fixed before you approve, with a stated validity window — removing execution-day rate surprise. For future-dated exposures, request a quote on your corridor and discuss timing with the desk.
Corridors, tools and reading for this calculator
More calculators
Replace assumptions with a committed quote
Executable rate, disclosed fee, committed receive amount — before you pay anything.
Request a Quote