Best Fx Risk Management Strategies

Corphedge, MB

Title

• Title: Navigating Currency Challenges: FX Risk Management • Subtitle: Strategies for Mitigating Risks in Foreign Exchange Markets

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Corphedge, MB

INTRODUCTION TO FX RISK • Definition: Understanding FX Risk • Explanation of currency fluctuations and their impact on businesses • Importance of managing FX risk for financial stability

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Types of Project Risks • Transaction Exposure • Translation Exposure • Economic Exposure • Brief explanation of each type

Corphedge, MB

Corphedge, MB

Identifying Exposure

• Steps to identify and quantify exposure • Importance of thorough exposure assessment

Risk Assessment

• Analyzing the impact of currency movements on financial performance • Sensitivity analysis for cash flows, earnings, and financial ratios

Corphedge, MB

Corphedge, MB

Risk Mitigation Strategies • Forward Contracts: Locking in exchange rates • Options Contracts: Providing flexibility with premiums • Natural Hedging: outflows

Matching

currency

inflows

with

• Diversification: Holding a diversified currency portfolio

Corphedge, MB

Hedging Policies • Developing clear policies for when and how to hedge • Determining the percentage of exposure to be hedged

Corphedge, MB

Case Study • Real-world example of a company successfully implementing FX risk management strategies • Demonstrating performance

the

positive

impact

on

financial

Corphedge, MB

Monitoring and Review • Importance of regular monitoring and adjustment • Stress testing for extreme currency movements

Corphedge, MB

THANK YOU

Contact Information +370 616 38890 bartas@corphedge.com https://corphedge.com/