How To Manage Foreign Exchange Risk

Raghu Palat


In Circulation

How to risk-proof your business against exchange rate fluctuations Given the increasingly global nature of business and investments, fluctuations in foreign exchange or forex rates now impact a vast number of businesses affecting as they do both profits and investment decisions of importers and exporters, multinational businesses, bankers and international investors. In addition, even a domestic business can face risks to its profits and market share as a result of fluctuations in foreign currency prices.

In this book, a vastly experienced banker and financial expert shows how you can risk-proof your business and profits against adverse exchange rate fluctuations, highlighting: Factors that determine exchange rates; How to make sense of forex rate quotations; Forward rates: forward differential, premium / discount, forward rate quotations; Types of forex contracts, including long-term forward contracts; Foreign exchange transactions: different ways you can receive or remit forex; Foreign exchange risks: what they are and how you can control them using swaps, forward rate agreements, futures and options, etc.; How to forecast forex rates; Plus, a glossary of important forex terms.

Many business professionals mistakenly consider foreign exchange to be a complex and arcane topic. Assuming no real prior knowledge, this book demystifies the subject making it easily understandable. The author's thrust is on clarity and usefulness; his goal to help you understand how you can protect your business and profits from the risks of adverse foreign exchange fluctuations. RAGHU PALAT is one of India's leading writers on banking, finance and investments. He has written over thirty extremely well received books. A career banker, Mr. Palat has held very senior positions with multinational banks in India and abroad. Raghu Palat is presently a consultant to several banks and also runs a dedicated finance portal.

What will you learn from this book

  1. Understanding Exposure: Identifying and understanding the types of foreign exchange exposure (transaction, translation, and economic exposure) a business or individual faces is crucial in managing risk.

  2. Hedging Strategies: Exploring various hedging techniques such as forward contracts, options, swaps, and futures to mitigate the impact of currency fluctuations on finances or investments.

  3. Diversification: Diversifying across currencies or regions can help spread risk, reducing vulnerability to fluctuations in a single currency.

  4. Risk Assessment and Measurement: Tools and methods for assessing, measuring, and quantifying foreign exchange risk to make informed decisions and develop risk management strategies.

  5. Financial Instruments: Understanding and effectively using financial instruments available in the foreign exchange market to manage risk, while considering their advantages and limitations.

  6. Impact on Financial Statements: Exploring how currency fluctuations affect financial statements and strategies to manage the impact on earnings, cash flow, and balance sheets.

  7. Market Analysis and Forecasting: Techniques for analyzing currency markets, forecasting exchange rate movements, and using this analysis to inform risk management decisions.

  8. Corporate Policies: Developing and implementing corporate policies and guidelines to manage foreign exchange risk across different departments or subsidiaries within an organization.

  9. Regulatory Compliance: Understanding regulatory requirements related to foreign exchange risk management and ensuring compliance with relevant laws and regulations.

  10. Continuous Monitoring and Adaptation: Implementing processes for continuous monitoring of exchange rate movements, reassessment of risk exposure, and adjusting risk management strategies accordingly.

Language English
ISBN-10 978-8170947929
No of pages 200
Font Size Medium
Book Publisher Vision
Published Date 01 Jan 2010

About Author

Author : Raghu Palat

1 Books

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