Abstract
Management of exposure to foreign exchange risk centres on the concept of hedging, which is a process whereby a firm can be protected from unanticipated changes in exchange rates. As business becomes global, firms get increasingly engaged in international activities such as exports, cross-border sourcing, joint venture with foreign partners, and establishing production and sales affiliates abroad. As a result, firms find it necessary to pay careful attention to the exposure to foreign exchange risk and to the design and implementation of appropriate hedging strategies. This is because changes in exchange rates affect the values of cash flows (costs and revenues), assets, liabilities, market share and the competitive position of the firm.
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© 2003 Imad A. Moosa
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Moosa, I.A. (2003). Financial and Operational Hedging of Exposure to Foreign Exchange Risk. In: International Financial Operations. Finance and Capital Markets Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781403946034_5
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DOI: https://doi.org/10.1057/9781403946034_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-43312-4
Online ISBN: 978-1-4039-4603-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)