Tech Data is a distributor of IT hardware and software in Europe and throughout the Americas. The company generates approximately $25 billion in annual revenue via operations in more than 100 countries, so currency risk is a significant concern. Five years ago, Tech Data mitigated this risk through $8 billion a year worth of foreign exchange (FX) hedges, executed daily across 18 currency pairs. The hedging process provided the desired protection, but it was not standardized or centralized, which led to inefficiencies.
The company's senior vice president and treasurer, Chuck Dannewitz, launched an initiative to change that. Treasury & Risk spoke with Dannewitz, along with vice president and assistant treasurer Scott Walker, about the project and the FX hedging best practices that Tech Data implemented.
T&R: Prior to 2008, what did FX hedging look like at Tech Data?
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