International Business - Foreign Currency

Masters
Essay
Miscellaneous
Pages 10 (2510 words)
Download 0
Participation in international markets may result in a foreign exchange risk known as transaction exposure. This risk occurs when a company has a payable (or receivable) denominated in a foreign currency (FC). The risk lies in the fluctuation of the FC exchange rate…

Introduction

Opposite relationships hold for net asset positions, which are denominated in an FC.
As a result of the cash flow impact of transaction exposures and the requirements of Financial Accounting Standards Board Statement no. 52, Foreign Currency Translation, to include foreign exchange transaction gains and losses in the determination of net income, most companies are hedging these exposures. In fact, a 1986 FASB research report, Foreign Exchange Risk Management under Statement 52, revealed that 84% of 162 company treasurers engaged in foreign trade regularly or selectively hedge foreign transaction exposures.
The research of the problem of the foreign currency risk is important because the globalization of the world economy and the devaluation of the U.S. dollar have allowed more American companies to enter the export/import markets. Additionally, many managers who previously avoided these markets are finding that international transactions can make their companies more competitive in marketing products and procuring parts and/materials. As new companies are exposed to foreign exchange risk, managers will necessarily be concerned with the development of an effective hedging program. ...
Download paper
Not exactly what you need?

Related papers

International payments and settlements currency transactions
Prestigious companies of the stature of Halliburton, Lucent Technologies and Monsanto face allegations of bribery to gain unnatural advantage in business and billions of dollars involved. A discussion on this issue including an assessment of the impact of the Foreign Corrupt Practices Act and the Organisation of Economic Cooperation and Development Convention forms 'Section-2' of this paper. The…
The Foreign Exchange Market
For example, the desire to purchase a foreign automobile or to travel abroad produces demand for a currency in which these goods or services are produced. Second reason maybe to acquire foreign currency is to purchase financial assets in a particular currency. The desire to open a bank account, purchase foreign stocks or bonds or acquire direct ownership of real capital would fall into this…
International Business - Foreign Currency
Opposite relationships hold for net asset positions, which are denominated in an FC.…
Business so Foreign
This paper will briefly but sufficiently provide an explanation for this.…
Identify the main sources of foreign currency risk confronting an international firm and evaluate different techniques that you think may be most appropriate i
It can be seen that due to the volatile and unpredictable nature of the forex markets during times of political or economic crisis both these markets carry a considerable risk for the multinational firms. The preceding discussion will assess the types of strategies which can be used to avoid these risks and their feasibility in the short and long term.…
International Business essay
The competition is increased globally since companies look for the best suppliers offering high quality at low prices, search for international human talents and acquire the best possible know how in order to satisfy better their customers' needs.…
International Business - Trade and Currency
The reason of this paper and the discussion is to prove that counter-trade has more benefits. Through illustration of examples I have tried to prove why counter- trade persist despite currency conversion is possible.…