Manage FX risk with confidence as you grow globally

Currency volatility shouldn’t stop you from growing your business. Having the right foreign exchange (FX) tools in place is important to protect your margins and plan with confidence. But collateral tied up in FX facilities and sudden margin calls can drain the liquidity available to manage larger FX hedges and multi-market exposure.

Export Development Canada’s (EDC) Foreign Exchange Guarantee (FXG) works with the FX facility you already have with your financial institution, or broker. Instead of posting collateral for your FX contracts, your provider uses FXG to secure them. This gives you the same FX risk protection you rely on today, but with more available working capital to support larger contracts and multi-market growth.

Why having an FX strategy matters in 2026

EDC’s economic analysts predict a volatile year ahead, even as global growth stabilizes. Our latest Global Economic Outlook forecasts world gross domestic product (GDP) growth of 3.1% in 2026, Canadian growth at 1.2% and a policy landscape shaped by tariffs, shifting trade routes and cautious consumers.

Central banks are gradually easing from multi-year, high bond yields, which keeps financing conditions tighter than pre-pandemic norms. FX markets are expected to fluctuate, with the loonie averaging US$0.72 in 2026.

Prince Owusu, senior economist at EDC, says, “It’s important to talk to your financial advisor and keep abreast of developments in the countries where you’re doing business, to help you manage currency fluctuations in today’s turbulent global market.”

Having an FX strategy helps you manage that volatility, especially if you’re working with multiple global buyers, or entering new markets where currency swings can quickly erode margins. Strengthening those FX tools with EDC’s FXG can give you the working capital flexibility to turn uncertainty into an opportunity to grow.

How managing large FX exposures puts pressure on working capital

Even with an effective hedging strategy, traditional FX facilities are structured to limit the cash available to you. Collateral requirements and margin calls can leave you short on working capital just when you need it most.

As your FX exposure grows, every dollar of available liquidity matters. You need the freedom to pursue new opportunities, fulfil larger orders and respond quickly to shifting market conditions. That’s where EDC’s FXG can help strengthen your FX strategy by freeing up working capital and increasing your borrowing capacity with your financial institution, or broker.

Why working capital constraints increase FX risk

Even when your hedging program is solid, the financial realities behind it can quietly drain your resources.

Collateral that ties up growth capital

Most forward contracts, or FX facilities, require collateral—often 10% to 15% of the contract’s value—although some require up to 30%, depending on contract size and market conditions.

For example, a $1-million FX facility may require $100,000 to $150,000 in collateral. That’s capital you can’t use for payroll, inventory, or financing new contracts.

Many medium-sized exporters want to know how to reduce FX collateral requirements without shrinking hedge size.

Margin call disruptions

Margin calls often happen at the worst possible moment. They can force you to shift cash into your FX facility when exchange rates change quickly, putting immediate pressure on your working capital.

With an FXG, you don’t have to meet margin calls until you reach the maximum amount allowed under the facility.

This gives you more predictable access to cash, so you can move quickly on to new opportunities.

How FX facility planning can support scaling into larger contracts

Financial institutions and brokers are essential partners in your FX strategy, but they often require:

• Collateral, even for well‑established exporters
• Margin calls that drain cash unexpectedly
• Facility limits that are smaller than the size of international opportunities you’re pursuing
• Restricted access to advanced hedging tools unless collateral is increased

This is where EDC’s support changes what’s possible.

How EDC’s FXG helps exporters boost FX strategies without tying up liquidity
 

How FXG works in three steps

Step 1: Set up, or maintain, your FX facility with your financial institution, or broker. Keep hedging like you do today. No changes required.

Step 2: EDC provides a guarantee that replaces the collateral your financial institution, or broker, would normally need. Your collateral requirement becomes zero.

Step 3: Hedge with full access to working capital and no margin calls until the facility maximum is reached. Your cash flow becomes more predictable. Your FX strategy becomes more flexible.