European Parliament Library

Exchange Rate Risk Measurement and Management :, Issues and Approaches for Firms, Michael Papaioannou

Abstract
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
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. DEFINITION AND TYPES OF EXCHANGE RATE RISK""; ""III. MEASUREMENT OF EXCHANGE RATE RISK""; ""IV. MANAGEMENT OF EXCHANGE RATE RISK""; ""V. HEDGING INSTRUMENTS FOR MANAGING EXCHANGE RATE RISK""; ""VI. HEDGING PRACTICES BY U.S. FIRMS""; ""VII. CONCLUDING REMARKS""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Note
"November 2006"
Physical Description
1 online resource (22 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9786613825896

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