Foreign Exchange & Foreign Trade

You close the order with one margin. And get paid another.

Between the day you set the price and the day the money comes in or goes out, there is a gap. In that gap, a relevant part of the order's result can change: part of it in currency movement, part in costs that are not always put on the table. I spent more than ten years in logistics, manufacturing and foreign trade before becoming an advisor: I know this gap from the inside.

01The operation starts at the port, not at the bank's desk

02All-in rate: the difference shows up when you open the bill

03Locking in a rate is a cash decision, not a guess about the dollar

When this becomes a problem

You quoted the product at one day's dollar rate, the shipment slipped three weeks, and the order's margin turned into something else, with nothing having changed in the operation, the supplier or the sale price.
You close the exchange deal over the phone, hear a rate, find it reasonable and never compare it with the market reference at that moment. The cost exists; you just can't see where it is.
You export, payment comes in 90 or 180 days, but salaries, inputs and taxes are due now, and the alternative that shows up is working capital in reais, at the cost of working capital in reais.
Your company has revenue in foreign currency and debt in reais (or the other way around), and nobody has ever sat down to look at that mismatch as a whole. Each operation is decided in isolation, on the impulse of the day.

How it works in practice

The difference between the bank's rate and the Central Bank's: the cost nobody shows

The PTAX is the reference rate published by the Central Bank, calculated from market quotes throughout the day. It is not the rate your company closes at: it is the thermometer. The rate you close at comes with a spread: the difference between the market reference and the price the institution offers you. That spread is the compensation of whoever executes the deal, and it is perfectly legitimate. The problem is when it is never discussed. Comparing the closed rate with the reference from the same time of day turns a conversation of "seemed good to me" into a number. It is the difference between negotiating and accepting. Calculate the spread on your last transaction against the day's PTAX (in Portuguese) →

All-in rate (VET): the only one that matters

VET stands for Valor Efetivo Total, the total effective value. It is the cost of the whole operation (exchange rate, fees and taxes) expressed as a single rate per unit of currency. It exists precisely to prevent the classic scene: an attractive rate up front and an IOF (financial transactions tax), a remittance fee and a local handling cost behind it. The VET is the standardized way of expressing that total cost. Ask for the VET in writing before closing: it is information that rarely comes up on its own in the conversation. Two quotes are only comparable by their VET. And remember: the taxation of foreign exchange varies with the nature of the transaction and changes over time. It is always worth checking what is in force on the date, not what applied last year.

Exchange advances (ACC and ACE): what they actually are

ACC is Adiantamento sobre Contrato de Câmbio, an advance on an exchange contract. The exporter closes the exchange contract before shipment and receives the reais in advance: you bring forward today money that would only arrive later, based on an order that has yet to ship. ACE is Adiantamento sobre Cambiais Entregues, an advance on delivered exchange documents: the same logic, only after shipment, when the documents have already been delivered to the bank and you are waiting for the importer to pay. Both are credit, with a cost tied to the foreign currency, and tend to work as export funding, not as ordinary working capital in reais. When you close the contract, you also set the rate: the order stops floating. That is why ACC and ACE are, at the same time, a cash tool and a risk tool.

Locking in a rate is not a guess about the dollar

Here is the most common misunderstanding on the subject. Whoever locks in the rate is not betting that the currency will rise or fall: they are taking the currency out of the equation. The directional bet is the opposite: it is staying exposed without having decided to. The starting point is always the mismatch: how much comes in and goes out in foreign currency, and on which dates. Part of it sometimes resolves itself (revenue in dollars against costs in dollars is a natural hedge, and requires no instrument at all). What is left can be handled with instruments such as the non-deliverable forward, the NDF, which settles only the difference between the locked rate and the reference on the date, or with futures contracts on the exchange, which are standardized and marked to market daily, meaning they hit your cash before maturity. Each has a different cash and accounting consequence. Which one makes sense depends on your operation, the term and the size, not on an opinion about the exchange rate.

What I do for you

I map your company's real mismatch: inflows and outflows in foreign currency, terms and dates, before talking about any product.
I translate the quote into VET and compare the closed rate with the market reference, so you see the cost as a number, not as an impression.
I explain ACC, ACE and the hedging alternatives with the numbers of your case: cost, effect on cash and what each one leaves unsolved.
I connect you to BTG Pactual's foreign exchange and foreign trade structure and follow the operation closely, from closing to settlement.
I stand by your side when negotiating spread and fees: a quote without comparison is a price accepted, not a price negotiated.
I set up a routine: who decides, when to lock in and on what basis. Exchange decided in the scare of the day tends to cost more than exchange decided under a rule defined beforehand.

What currency protection (hedge) does not do

Currency protection does not improve your margin: it freezes the one you already have. If the currency moves in your favor after you lock in, you do not capture that gain: that is not a flaw, it is exactly the price of predictability. It also has a cost, and some instruments consume cash before maturity. And ACC and ACE are debt, not revenue: if the shipment does not happen or the importer does not pay, the advance is still there, with charges and effects that need to be dealt with. None of this fixes a badly formed price, the wrong supplier or an order with no margin at the source. Foreign exchange protects a healthy operation; it does not save a crooked one. And I am not a customs broker or a tax firm; when the subject is customs or a specific tax, the right move is to call whoever does that.

Frequently asked questions

What is the practical difference between ACC and ACE?

The dividing line is shipment. With an ACC, you receive the reais in advance, before the goods ship, based on the export exchange contract already closed. With an ACE, shipment has already happened and the documents have been delivered to the bank: you receive the advance while waiting for the foreign importer to pay. In practice, the two can appear one after the other within the same cycle. What changes is the timing, the term and the risk involved at each stage.

My company is small. Does it make sense to think about hedging?

Size is not what decides it. The mismatch is: if your margin depends on a currency you don't control, the risk is there all the same. In smaller operations, sometimes the right answer is no instrument at all: it's adjusting the payment term, matching inflows and outflows, or renegotiating the closing date. That is also risk management, and it doesn't depend on buying any instrument. I would rather tell you that than push a contract.

Why is the rate I'm offered never the PTAX?

Because the PTAX is a reference, not a counter price. It is calculated from market quotes and published by the Central Bank; the rate on your transaction includes the institution's spread, plus fees and taxes. That is a normal part of how the exchange market works. What is not normal is never knowing how much it was. Ask for the VET and compare it with the reference rate from the same time of day. The conversation changes tone right away.

Do you handle my company's foreign exchange?

No. I am an investment advisor affiliated with GWM Investments, an office accredited with BTG Pactual, and I do not manage or hold anyone's money in custody. The funds and the transactions stay at BTG, under your company's tax ID (CNPJ). What I do is understand your operation, explain the mechanism in plain language, set up the conversation with the trading desk and follow up. You are the one who decides, with the information in hand.

Let's look at your foreign exchange with numbers on the table

Bring a real order: closing date, term, currency and the last rate you were offered. In a diagnostic conversation, at no cost, I will show you where the cost is and what can be done about it.

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