Currency Risk Management

Topics: Foreign exchange market, Forward contract, Derivative Pages: 2 (389 words) Published: November 10, 2008
The topic for this research paper is Currency Risk Management. Currency Risk Management is a very important subject in finance topic. It is related to all business, especially for international business. Multinational Corporation deals with countries worldwide and the currency rates are different and are changing every day. Currency Risk Management can protect business by hedging notional currency exposure and transactional or translational exposures. The impact of currency values on commercial operations is a familiar topic for the international executive. Therefore, it is very important for companies to know how to handle, prevent, and manage currency risk.

The purpose of this proposed research is to reduce currency exposure risk and to prevent lose value from currency depreciation. Also to learn more about different types of managing currency risk such as hedging, swapping, future or forward currency. In additional, for better handling currency risk, the following topics such as currency hedge, swap, and future or forward currency contracts are very useful and related as well. It is very important for companies to fully understand and well used those aforesaid topics to reduce currency risk. Much of the attraction of currency markets stems from its synthesis of all aspects of the world economy distilled into a single, digestible value. The expected result from this research is to know when and how to use hedge, swap, future or forward contracts and exchange currency. Moreover, one should understand more about the current situation of the world and different countries’ economic prospects. The significance of relative currency values rests primarily on their relationship to world markets and their interaction with international trade, investment, and monetary practices. In order to do the research, the data from different countries’ current currency exchange rates are needed. Moreover, economic analysis and current situation of particular country is also...
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