What future for foreign exchange options
In this article, the author warns businesses with exposure to currency fluctuations to be certain of their business strategy. It highlights plans of financial services companies to withdraw from the Foreign Exchange Options (FX Options) market. It also highlights impact of the EU Referendum on the value of currencies like Sterling and euro.
24 June 2016
A shifting currency landscape can wreak havoc on a balance sheet. The authors look at the actions that could be taken by a company as protection against currency swings.
Estimating cost of equity
Empirical reports of priced foreign exchange ( FX) risk raise the question of whether managers should adjust their cost of equity estimates for FX risk. To study this question, the authors empirically compare the cost of equity estimates of several risk-return models, including some that have explicit FX risk premia and others that do not.
Companies turn to CFDs to save on FX hedge costs
The article reports on the growing number of companies in Europe that are using contract for difference (CFD) to save on foreign exchange (FX) hedge costs.
UK SMEs express concern over currency risk
The article reports on the results of the second annual Currency Risk Outlook Survey wherein the currency risk tops among all other risks for the small and medium-sized enterprises in Great Britain
Articles and books in the Library collection
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The whole picture
Treasurer, October 2014. pp.36-37
As corporations grow increasingly global, foreign exchange exposures are becoming a central focus of risk management for treasurers. FX risk management is not an isolated objective of any one part of the organisation: it requires co-ordination between those managing risks and strategic decision makers in business operations. The author asks which types of FX risks companies commonly encounter; what effect they can have on financial statements; and how the risks can be monitored and mitigated
How exporters can minimise their currency exchange costs
Financial Management, August 2014. p.56-57
Exports provide potentially lucrative sources of revenue for businesses, as well as a means of expansion. However, many businesses are oblivious to the impact that fluctuating exchange rates can have on their bottom line. Those that venture into overseas markets unprepared tend to encounter currency costs. This article describes some of the problems, and how to deal with them, including hedging strategies
Practical Audit and Accounting, Vol.25. No.7. April 2014. pp.81-82.
As businesses become increasingly global, aided by advances in technology, the issues surrounding foreign exchange management become ever more pressing. Article discusses some of the straightforward steps that businesses can take to manage currency risk. Careful planning is the key to every aspect of success in managing foreign exchange risk, says the author. Also discusses: forward contracts, stop loss orders, options, and using volatility.
Got to be certain?
Finance and Management, No.212. July / August 2013. pp.12-14.
Characterises a number of risks associated when using business contracts where foreign exchange rates are involved, dividing them into economic, pre-transaction and transaction risks. Evaluates hedging as a response to currency risk, for example through instruments like foreign exchange "forwards" and options, as well as alternatives to hedging where it is not an appropriate course of action.
Harness your hedges
Treasurer, April 2013. pp.38-39
Looks at approaches companies may take to foreign exchange risk. Outlines the benefits of re-evaluation corporate hedging policies and strategies to take a more proactive approach to FX risk management.
Help for hedgers
Treasurer, October 2011. p.27.
Hedging in financial markets has become more common across industries and asset classes over the years as businesses have better recognised their exposures. The markets have opened up to customers of all sizes, enabling almost any company to hedge. This article considers the independent advice that treasurers need to ask for when hedging.
The handbook of international trade and finance : the complete guide for international sales, finance, shipping and administration
Grath, A. (Kogan Page, 2016)
Contains a chapter on currency risk management
Managing currency risk using foreign exchange options
Hicks, A. (Woodhead and the Association of Corporate Treasurers, 2000)
This book has been written with the corporate treasurer or finance director in mind. The objectives are twofold: firstly, to give a clear perspective of how FX options are derived from the underlying FX markets. Secondly, to give a clear understanding of the benefits, cost, risks and rewards associated with the various FX option strategies and how options can play a part in any company's FX risk management programme.
Managing foreign exchange risk: how to identify and manage foreign currency exposure
Bennet, D. (Pitman, 1997)
An essential guide for finance professionals with responsibility for foreign exchange. Includes sections on: the nature of currency risk; formulating successful hedging strategies; using forex instruments effectively; measuring the performance of your forex transations.
Further books and articles