wholesale foreign exchange (FX) market plays a vital role in the global economy by providing an efficient means for exchanging currencies. It is used to pay for imports, to allow exporters to be paid in other currencies and to process cross-currency flow of funds. While it causes FX risk due to the randomness of movements in exchange rates currencies the forward FX market and other derivative contracts and strategies can be used to hedge FX risk. FX risk exposures FX risk is the possibility of
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the FX Markets I Market Update II FX Hedging III Slide 2 Introduction the FX Markets Statistics FX is the largest / most liquid global market Daily Turnover Bid / Offer Number of securities FX Market 3.2 Trillion 4 bp (0.04%) 150 (40 actively traded) Bond Market 900 Billion 5 bp 2,000,000 Equity Market 400 Billion 15 bp 20,000+ Source: BIS (September, 2007) Slide 3 Market Dynamics Short Term Drivers of the Market Market
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Forwards, Futures and Money-Market Hedging/1 Forwards, Futures and Money Market Hedging Prof. Ian Giddy New York University Hedging Transactions Exposure Types of exposure l One-shot exposure l Hedging approaches: l u Open u Forward u Money market u Futures u Options l Ongoing transactions exposure Forwards, Futures and Money-Market Hedging 7 Copyright ©1997 Ian H. Giddy Giddy Forwards, Futures and Money-Market Hedging/2 Tools for Hedging l Petrobras has to pay for
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FX Spot Trading and Risk Management from A Market Maker’s Perspective by Mu Yang A thesis presented to the University of Waterloo in fulfilment of the thesis requirement for the degree of Master of Quantitative Finance Waterloo, Ontario, Canada, 2011 c Mu Yang 2011 Author’s Declaration I hereby declare that I am the sole author of this thesis. This is a true copy of the thesis, including any required final revisions, as accepted by my examiners. I understand that my thesis may be made electronically
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Giddy | Hedging 1 Hedging Techniques Dr. Ian Giddy New York University Techniques of Hedging A brief comparison of hedging tools Forwards, futures, swaps Asset-liability matching Pricing and linkages among the tools Uses and abuses of options When to use, and when not to use Copyright ©2009 Ian H Giddy 4 Giddy | Hedging 2 What Hedging Instruments? What Protection Needed? Volatility & Direction Direction Complex risks Or arbitrage Exotics, Hybrids, structured notes
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Hedging FX Exposures: Which Strategy is Right for Your Business? This article addresses foreign exchange (FX) risk, examines a large Swiss multinational company and the impact on its financial statements (second half of 2011), and suggests various hedging strategies using FX options. Udi Sela - Vice President - Numerix - 27 Oct 2011 Since the sub-prime crisis, the markets have witnessed unprecedented levels of volatility across all asset classes. The impact of unpredicted volatility could be significant
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Foreign Exchange Risk Management Michael Highfill Liberty University BUSI 620 – B05 LUO Dr. Mike Thirtle July 6, 2012 Foreign Exchange Risk Management Introduction Foreign exchange (FX) is a risk factor that must be considered by all firms that wish to enter, grow, and succeed in the global marketplace. Although most U.S. exporters prefer to sell their goods in U.S. dollars, creditworthy foreign buyers are increasingly demanding to pay in their local
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foreign exchange market 1. Introduction In 2010, the debt crisis caused the euro to go down 10% in a three-month period. Some largest hedge funds in America discovered this opportunity and short euro in groups to an enormous scale. Later on, the British pound is being infected. It continuously dropped for six days, which wrote the longest dropping period record. In this paper, the objective is to critically analyse how the European sovereign debt crisis affects foreign exchange markets. The theme
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Francisco Polo Professor Hamid Assar International Finance – FIN535 May 22, 2012 Summary Best Buy Co., Inc. is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Puerto Rico, Mexico, Canada and China. The company's subsidiaries include Geek Squad, CinemaNow, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these
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Part 2 Introduction China’s export growth and penetration have been remarkable. While China was basically a closed economy 30 years ago, it is now the leading exporter to Japan, the second leading exporter to Europe, and the third leading exporter to the US. This surge in exports has been accompanied by growing trade imbalances between China and the rest of the world. China’s global current account surplus equaled 9% of Chinese GDP in 2006 and 11% of GDP in 2007 (Thorbecke & Smith, 2010). These
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