12.19 Developing policies for managing foreign exchange exposure
Your textbook lists five ways - Hill (2005) calls them 'policies' - to establish a long-term strategy for managing foreign exchange exposure. They are:
- Establish a central control centre for foreign exchange dealings.
- Give due attention to the three types of exposure risk and in particular develop ways of dealing with economic exposure.
- Set up a foreign exchange forecasting apparatus, or hire a reliable forecaster.
- Establish or, more likely, improve reporting systems.
- Produce monthly exchange rate forecasts on the understanding that the process of producing forecasts may be more beneficial than the forecasts themselves.
Before consolidating the main points from Part B, read Hill's (2005) view of managing foreign exchange risk. To confirm your understanding of the terms used, you should pay particular attention to pages 674-675 - and be sure to refer back to Chapter 6.
In your text
Hill 2005, Chapter 20, pp. 683-687.
Previous Page