Principles of managing currency risks by Macedonian companies

Bishev, Gligor and Boskov, Tatjana (2016) Principles of managing currency risks by Macedonian companies. IJIBM International Journal of Information, Business and Management, 8 (3). pp. 28-42. ISSN 2076-9202 (Print)/2218-046X (Online)

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Abstract

Most investors will be 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 business practices. Having a truly international company can help with this as, theoretically, losses made when one currency falls will be recovered 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 to protect the client and the company should exchange movements exceed the agreed-upon level. Some businesses also agree on setting all contracts in their core currency, protecting them from any exposure as they always are paid the same relative amount.

Item Type: Article
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Tourism and Business Logistics
Depositing User: Tatjana Boskov
Date Deposited: 19 Aug 2016 10:49
Last Modified: 19 Aug 2016 10:49
URI: http://eprints.ugd.edu.mk/id/eprint/16090

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