STRONG EURO Alters Thinking On Foreign Currency Hedging

Perkins, Daniel M.
November 2002
Financial Executive;Nov2002, Vol. 18 Issue 8, p44
Academic Journal
The article discusses hedging in a time when the euro is gaining value against the American dollar and there is pressure on multinational companies--from senior executives or boards of directors--to stop hedging their foreign assets. To protect their companies' financial security, chief financial officers should: identify risk tolerance levels by analyzing quarterly reports where changes in the value of the U.S. dollar appear; evaluate foreign exchange exposure by measuring the euro's volatility and a company's assets and liabilities; develop a hedging strategy that considers credit restrictions, currency pricing, opportunities for liquidity, and reliability of forecasts; and make a decision about which hedging method--operational techniques, debt, or derivatives--to use.


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