Foreign Exchange RiskDr Kishor
Bhanushaliwww.ibmajor.wordpress.comIntroductionBusiness
environment: Internal Environment and External Environment
Ever-changing business environment and RiskMacro risk
factorsBusiness risk factors Risk: variability in operation
variable
Foreign Exchange Exposure and RiskBusiness firm engaged in
international transactionsDealing in foreign currenciesForeign
exchange exposure and foreign exchange riskIncrease in the volume
of cross border transactions Trade and financial flowsTransaction
exposure: Accounting exposureEconomic exposure Transaction exposure
and Operating exposure
Management of Foreign Exchange RiskAssessing the extent of
variability and identifying whether it is likely to be favorable or
adverseDeciding whether to hedge or not all or part of the
exposureChoosing the optimal hedging technique to suite the
situation Techniques for Hedging Transaction RiskForward
HedgeFuture HedgeMoney Market HedgeCurrency Option Hedge Cross
Hedging
Internal Hedging StrategiesLeading and Legging : advancing and
lagging in paymentCurrency diversificationRisk Sharing Invoicing
Netting and offsetting
