Archive : Risk

The terms exchange exposure and exchange risk is often used interchangeably, but they have their independent meanings.  It is through the exchange exposure that a firm faces exchange risk.   Exchange Exposure and Exchange Risk   Exchange Exposure is defined as the extent to which transactions, assets and liabilities of an enterprise are denominated in currencies other than the reporting [...]

An enterprise engaged in export/import trade will be affected by the change in the rate of exchange between the domestic currency and the currency in which the transaction is designated.  For instance, an Indian company which exported to France readymade garments when the Euro was quoted at Rs. 56.00 per euro will suffer a loss if the euro depreciates to Rs. 54.50 per euro by the time the Export [...]

Freeing of the economies and markets with resultant increased competition, need to survive with thinner margins, increased volatility in all markets (commodity, finance and foreign exchange) have brought o focus the paramount importance the risk management assumes today in the business world.  Derivatives have garnered greated attention recently as the instruments providing the needed leverage in [...]