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We have entered a period of marked volatility in foreign exchange markets. Volatility will be a permanent feature in international business for some years to come. CFOs need to be on top on their game in this area because much economic value is at stake. We offer a program in 3 steps to master foreign exchange risks when you are doing business overseas.
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1June 2011 Confidential and proprietary to SDA Conseil Inc
Currency markets are unforgiving for the unpreparedFOREIGN EXCHANGE PROGRAM
André Du Sault (LBS, Harvard)
CFO
2
When doing business overseasA discipline & tool kits
June 2011 Confidential and proprietary to SDA Conseil Inc
On becoming lean & strategic
CFO FOR THE 21ST CENTURYMastering foreign exchange risks
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3June 2011
US$ / C$
US$ / Euro
Confidential and proprietary to SDA Conseil Inc
High volatility in currency markets is here to stay
Financial Times
for three reasons...
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4June 2011 Confidential and proprietary to SDA Conseil Inc
1. Many Western countries are under severe economic stress
High debtBudget deficitCurrent account deficitUnemploymentSlow growthBad politics
With remedies hard to swallow.
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5June 2011 Confidential and proprietary to SDA Conseil Inc
2. Financial markets remain huge and half regulated, driven by the opportunities of the short term and the herd mentality.
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6June 2011 Confidential and proprietary to SDA Conseil Inc
3. The rise of India-China is remoulding the macroeconomic cycle
2000-2010: Worldwide disinflation
2010-2020: Worldwide commodity inflation
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July – August 2005
In a context of macroeconomic instability, there are costs for not being ready
• Was it really the perfect crisis in 2007-2008?
• Signals about a forthcoming crisis were there (see Atlantic).
• Tracking stress indicators allows to anticipate and react in time.
Confidential and proprietary to SDA Conseil IncJune 2011
8June 2011 Confidential and proprietary to SDA Conseil Inc
You need to have your act togetherin foreign exchange3 LESSONS
9June 2011 Confidential and proprietary to SDA Conseil Inc
Lesson 1: Be prepared
Exposure forecasts at handHedging objectives definedFX policies in placeInstruments ready
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10June 2011 Confidential and proprietary to SDA Conseil Inc
Lesson 2: Anticipate the stress signals
Understanding risksAssessing possible scenariosTracking relevant stress indicatorsSeeing clouds and storms ahead
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11June 2011 Confidential and proprietary to SDA Conseil Inc
Lesson 3: Act on your best options
Your initial reference positionScenarios & turning pointsYour best hedging optionsTaking positions and negotiating
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12June 2011 Confidential and proprietary to SDA Conseil Inc
If foreign exchange feels like walking on a tightrope, it is time to get advice
on toolkits
on best practices for the CFO
on policies adapted to your situation
on hedging strategies
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13June 2011 Confidential and proprietary to SDA Conseil Inc
Perhaps all you need is a quarterly review
to see more clearly ahead
to weigh your risks
to figure out your best options
14June 2011 Confidential and proprietary to SDA Conseil Inc
Or if you would like to participate in a training session
to acquire a new skill set
to exchange with peers
to build a new comfort zone
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Confidential and proprietary to SDA Conseil Inc
15June 2011
Conference on FX risks
Economic reviews
Transfer of best practices
Strategic tool kits
Complete FX program
For more information, insights& requests:
André Du Sault514 [email protected]
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16
INTERNATIONAL EXPERIENCE: André Du Sault, B.Ing.F., MBA (LBS), MPA (Harvard)
CFO at Novartis 1987 2000 (country holdings)‐ ‐ Small & large affiliates ‐ Annual hedging programs from US$ 5 M to US$ 150 M ‐ Evaluated as profit center: Positive results in every year
Direct responsibility in times of financial crises: ‐ Mexico: 1997 (Asian crisis) ‐ Philippines: 1994 (Mexican crisis) ‐ Brazil: 1989 1991 (hyper inflation)‐
Long time perspective of countries & markets ‐ Various sources: FT, WSJ, TE, Reuters, Think tanks ‐ Economists: Krugman, Brittan, Roubini, Roach, Wolf ... ‐ Profile: www.sdaconseil.com
June 2011 Confidential and proprietary to SDA Conseil Inc
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