Case Study: Illinois-based Automotive Parts Supplier protects margins from MXN volatility with Monex Global

Illinois-based Automotive Parts Supplier hedges 8.9M MXN with Monex Global

An Illinois-based automotive parts supplier faced a challenge when the Mexican peso strengthened against the US dollar after they had negotiated a parts purchase in MXN but priced their own components for resale in USD. This adverse currency movement was eroding their expected profit margins, and they were unable to adjust their own prices. The company needed to pay an 8.9 million MXN invoice to their Mexican vendor within two months. To address this, they worked with Monex Global.

Monex Global implemented a solution using a fixed-date forward contract. They executed an 8.9 million MXN forward, hedging 100% of the exposure and locking in the exchange rate for the date the payment was due two months out. This strategy successfully protected the company's remaining margin from further erosion. The outcome was that the supplier saved significantly compared to what they would have paid if they had waited and used the spot rate on the invoice due date, with Monex Global providing a simple, clean execution that required no ongoing management.