Mubo Supports Mid-Sized Companies' Foreign Exchange Risk Management... "Alleviating the Burden of Rising Exchange Rates"

Operation of 'Beomwi Limited Forward Exchange' Fluctuation Insurance from the 15th
"Continuous Expansion of Customized Support System for Customer Exchange Risk Management"

Lee In-ho, President of Korea Trade Insurance Corporation. (Photo by Korea Trade Insurance Corporation)

[Asia Economy Reporter Moon Chaeseok] Korea Trade Insurance Corporation (K-SURE) announced that it will adopt a foreign exchange fluctuation insurance method that limits profits and losses within a certain range. This is to help small and medium-sized export companies manage foreign exchange risks stably.

K-SURE will operate a 'range-limited forward exchange' type foreign exchange fluctuation insurance starting from the 15th. It is a forward exchange type foreign exchange fluctuation insurance that limits profits and losses within a certain range.

In the general forward exchange method, if the exchange rate falls (the value of the won rises), losses are fully compensated, but if the exchange rate rises, all profits must be paid.

In the range-limited forward exchange method, no matter how much the exchange rate fluctuates, the amount to be compensated or paid is limited within a pre-set range.

Foreign exchange fluctuation insurance is a system that hedges (risk avoidance) the risk of foreign exchange losses by fixing the foreign currency amount in Korean won in advance. From the perspective of export companies, even if the exchange rate falls, they can be compensated for foreign exchange losses from K-SURE through foreign exchange fluctuation insurance.

Companies receive insurance payments if foreign exchange losses occur compared to the guaranteed exchange rate at the time of insurance subscription. If foreign exchange gains occur, they must pay the profits.

K-SURE expects that with the addition of the range-limited forward exchange method amid concerns over increased exchange rate volatility due to the novel coronavirus infection (COVID-19), customers will be able to manage foreign exchange risks in various ways.

K-SURE stated that it actively reflected the demands of export companies that there was a need to introduce the range-limited forward exchange method.

A self-conducted foreign exchange fluctuation insurance survey in March showed that companies faced many difficulties with the burden of paying profits.

K-SURE plans to separately produce an explanatory video and upload it from the 15th on the 'Foreign Exchange Risk Management Support Center' on its homepage and its official YouTube and Instagram accounts.

Meanwhile, K-SURE is also promoting a plan to link local governments' and related organizations' insurance premium support projects with the range-limited forward exchange insurance.

Since 2008, K-SURE has held foreign exchange forums to alleviate the exchange rate burden on export companies. This year, it was held online in May. 'Video' and 'phone' consultations have been added to the '1:1 visit foreign exchange risk management consulting' that directly visits companies.

Lee In-ho, President of K-SURE, said, "As uncertainty in the foreign exchange market increases due to COVID-19 and interest in foreign exchange risk management grows, we are striving to create customized systems that can satisfy diverse customer demands. We will continue to refine the system by reflecting customers' voices so that they can focus on exports despite difficult external conditions."

K-Sure Headquarters Building. (Photo by Korea Trade Insurance Corporation)

This content was produced with the assistance of AI translation services.