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5 things every leader should know about currency hedging

Lucia Maxim, 11 Feb 2010
Romanian version

Currency hedging is an approach that is intended to protect companies and institutions’ revenues and expenses from the risk incurred by any shifts in the value of currency used in the investment scheme. In order to explain what currency hedging consists in and how it can influence a company’s balance, Wall-Street interviewed specialists in the field and compiled a list of five most important things every leader should know about currency hedging.

Slide 1 / 6
 
  • 5. What is currency hedging?
  • 4. Who uses currency hedging vehicles?
  • 3. Currency hedging doesn’t maximize profits
  • 2. How to currency hedge?
  • 1. How to currency hedge in a stable forex market?
  • S-ar putea sa te intereseze...
 

5. What is currency hedging?

5. What is currency hedging?
Currency hedging techniques consist of transactions aimed at keeping the buying power of a currency through forward contracts or spot contracts.

Iulian Lupu, financial expert at the trading department with Bucharest Stock Exchange said that the main stages in currency hedging are the staff training for the execution of transactions, identification of the currency risk, as well as finding the risk management options.

Companies must work closely with a financial institution that could provide them assistance in finding the best solution to minimize currency risk, and in executing currency hedging transactions.

The most important stage is when companies assess the effectiveness of the operation over their balance.

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Article comments "5 things every leader should know about currency hedging"

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