Principles of managing currency risk by companies

Bishev, Gligor and Boskov, Tatjana (2015) Principles of managing currency risk by companies. In: Liderstvo i menadžment – država, preduzeće, preduzetnik - LIMEN, 10-11 Dec 2015, Belgrade, Serbia.

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Abstract

Most investors are familiar with the concept of currency exposure, with constantly changing exchange rates affecting the cost of investing in international securities. These same issues also affect companies that operate internationally. So what effect do currency fluctuations have on company profits, and what are they doing to insulate themselves? In this paper we examine this question. Firms can choose to manage their currency exposure through various business practices. Truly international company, theoretically, losses when one currency falls and recovers lost when another rises. Where contracts are concerned business can also set up clauses that reduce this exposure. In many cases this comes in the form of an agreement which protects the client and the company. Some businesses also agree on setting all contracts in their core currency, protecting them from any exposure as they always paying the same relative amount.

Item Type: Conference or Workshop Item (Paper)
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Tourism and Business Logistics
Depositing User: Tatjana Boskov
Date Deposited: 26 Jan 2016 15:05
Last Modified: 26 Jan 2016 15:05
URI: http://eprints.ugd.edu.mk/id/eprint/15048

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