Currency Risk Management (Part 2)

Author: Institute of Chartered Bankers (CIB), Coyle
Publisher:
Publish Date: 2002-09-01
Features: Currency risk, also known as exchange rate risk or foreign exchange risk, arises from adverse fluctuations in foreign exchange rates. If a company's assets and liabilities are denominated in foreign currency, or if contracts specify receiving or paying in foreign currency, the company faces currency risk. Currency Risk Management is part of the "Financial Risk Management" series of foundational textbooks by the National Academy of Accountants. It includes six major sections: Overview of Currency Risk, Foreign Exchange Markets, Hedging Currency Exposure, Currency Futures, Currency Options, and Currency Swaps, comprehensively covering all aspects of currency risk. When the magnitude, direction, or timing of future changes is uncertain, the risk is referred to as a floating exposure. The change may be favorable rather than unfavorable—as long as it is favorable, the company can benefit from the financial risk exposure. Currency Risk Management is part of the "Financial Risk Management" series of foundational textbooks by the National Academy of Accountants. It includes six major sections: Overview of Currency Risk, Foreign Exchange Markets, Hedging Currency Exposure, Currency Futures, Currency Options, and Currency Swaps, comprehensively covering all aspects of currency risk. When the magnitude, direction, or timing of future changes is uncertain, the risk is referred to as a floating exposure. The change may be favorable rather than unfavorable—as long as it is favorable, the company can benefit from the financial risk exposure.