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Exchange rate risk measurement and management : issues and approaches for firms /
Measuring and managing exchange rate risk exposure is important for reducing a firm's vulnerabilities from major exchange rate movements, which could adversely affect profit margins and the value of assets. This paper reviews the traditional types of exchange rate risk faced by firms, namely tr...
| Call Number: | Libro Electrónico |
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| Main Author: | |
| Other Authors: | |
| Format: | Electronic eBook |
| Language: | Inglés |
| Published: |
[Washington, D.C.] :
International Monetary Fund,
©2006.
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| Series: | IMF working paper ;
WP/06/255. |
| Subjects: | |
| Online Access: | Texto completo |
| Summary: | Measuring and managing exchange rate risk exposure is important for reducing a firm's vulnerabilities from major exchange rate movements, which could adversely affect profit margins and the value of assets. This paper reviews the traditional types of exchange rate risk faced by firms, namely transaction, translation and economic risks, presents the VaR approach as the currently predominant method of measuring a firm's exchange rate risk exposure, and examines the main advantages and disadvantages of various exchange rate risk management strategies, including tactical versus strategical and passive versus active hedging. In addition, it outlines a set of widely accepted best practices in managing currency risk and presents some of the main hedging instruments in the OTC and exchange-traded markets. The paper also provides some data on the use of financial derivatives instruments, and hedging practices by U.S. firms. |
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| Physical Description: | 1 online resource (20 pages) |
| Bibliography: | Includes bibliographical references. |
| ISBN: | 1283513447 9781283513449 9781451909685 1451909683 1462313477 9781462313471 1452784442 9781452784441 9786613825896 6613825891 |
| ISSN: | 2227-8885 ; |