Currency Risk

If I told you that you could save $20k on your $1 million film budget, would you be happy? OF COURSE YOU WOULD. How about if I told you that you would be charged another $20k on your camera package? You would care! An aspect of international filmmaking that filmmakers rarely don't pay much attention to is the foreign exchange currency risk.

Currencies are traded just like stocks or commodities. The stronger a country's economy relative to another country's economy, the stronger its currency will be. For example, the US dollar has weakening relative to most other currencies (including the Euro) for the past year. This means that today, you could exchange one Euro for more dollars than you could a year ago. Applying this to filmmaking, if you found an investor who wanted to invest his Euros into a US based production, the same amount of Euros would buy a larger production budget today than it would a year ago.

Currencies usually follow long trends that manifest over months not weeks. But before when a trend does break because you could suddenly have less money than you planned. I once produced a film with US$ from a US investor for a film based in Canada (Canada has its own currency called the "Looney"). During production, the US dollar reversed trends from strength to weakness. As a result the future costs which had not yet paid for were more expensive. For example, we planned to do our entire post production in Canada but with the weakening dollar it would cost more US dollars. Without contacting any banks or performing complex financial hedges, we used a practical currency hedge by moving as much post production to the US as possible. By doing this, we removed exchange rate risk.

Before you make any decisions about where to shoot your film, consider all of the factors, including exchange rates, tax credits, tax incentives, quality of crew and many more. For exchange rate advice, you should contact a bank that specializes in film finance, like Comerica Bank.

For a sample film budget check QuickFilmBudget.com