Research on Foreign Exchange Risk Management
Research Paper On
Foreign Exchange Risk Management
Submitted In Partial Fulfillment
Of the Requirement
Of Masters of Business Administration
Table of Contents EXECUTIVE SUMMARY 1 CHAPTER 1: PLAN OF THE RESEARCH 4 1.1. INTRODUCTION 5 1.1.1. Features of Forex Market 6 1.1.2. Functions of Forex Market 7 1.1.3. Structure of Forex Market 8 1.1.4. Needs for Foreign Exchange 9 1.1.5. What Does Forex Provide? 9 1.1.6. Methods of Quoting Exchange Rates 9 1.1.7. Types of Transactions 11 1.1.8. Factors Affecting Exchange Rates 12 1.1.9. Factors Affecting Indian Rupee 13 1.1.10. FORIEGN EXCHANGE RISK 17 Classification of Foreign Exchange Risk 17 1.1.11. Trends in currencies fluctuation 21 1.1.12. Foreign Exchange exposure 23 Types of Foreign exchange exposure 23 Managing the Transaction Exposure 25 Differences between Forward Contracts & Future Contracts 28 1.2. OBJECTIVES 33 1.3. SCOPE 34 1.4. LITERATURE REVIEW 35 CHAPTER 2: COMPANY PROFILE 38 2. COMPANY’S INTRODUCTION 39 2.1. Company History 39 2.2. Company Profile 39 2.3. Company Layout 42 2.4. Company’s Role and Vision 43 2.5. Sales Performance 44 2.6. Profitability 45 2.7. Market Share 46 2.8. SWOT Analysis 47 CHAPTER 3: RESEARCH METHDOLOGY 48 3. RESEARCH METHODOLOGY 49 CHAPTER 4: ANALYSIS AT HSCI 50 4 . FOREIGN EXCHANGE RISK MANAGEMENT AT HSCI 51 4.1. Foreign currency exposure faced by HSCI 51 4.2. Foreign currency transactions at HSCI 52 4.3. HSCI’s exposure elasticity 52 4.4. Analysis of HSCI’s delta 53 4.5. Determining the foreign exchange exposure 55 4.5.1. Imports payment system at HSCI 55 4.5.2. Estimating the forex exposure 56 4.5.3. Tracking Chart of Honda
Foreign Exchange Risk Management
Submitted In Partial Fulfillment
Of the Requirement
Of Masters of Business Administration
Table of Contents EXECUTIVE SUMMARY 1 CHAPTER 1: PLAN OF THE RESEARCH 4 1.1. INTRODUCTION 5 1.1.1. Features of Forex Market 6 1.1.2. Functions of Forex Market 7 1.1.3. Structure of Forex Market 8 1.1.4. Needs for Foreign Exchange 9 1.1.5. What Does Forex Provide? 9 1.1.6. Methods of Quoting Exchange Rates 9 1.1.7. Types of Transactions 11 1.1.8. Factors Affecting Exchange Rates 12 1.1.9. Factors Affecting Indian Rupee 13 1.1.10. FORIEGN EXCHANGE RISK 17 Classification of Foreign Exchange Risk 17 1.1.11. Trends in currencies fluctuation 21 1.1.12. Foreign Exchange exposure 23 Types of Foreign exchange exposure 23 Managing the Transaction Exposure 25 Differences between Forward Contracts & Future Contracts 28 1.2. OBJECTIVES 33 1.3. SCOPE 34 1.4. LITERATURE REVIEW 35 CHAPTER 2: COMPANY PROFILE 38 2. COMPANY’S INTRODUCTION 39 2.1. Company History 39 2.2. Company Profile 39 2.3. Company Layout 42 2.4. Company’s Role and Vision 43 2.5. Sales Performance 44 2.6. Profitability 45 2.7. Market Share 46 2.8. SWOT Analysis 47 CHAPTER 3: RESEARCH METHDOLOGY 48 3. RESEARCH METHODOLOGY 49 CHAPTER 4: ANALYSIS AT HSCI 50 4 . FOREIGN EXCHANGE RISK MANAGEMENT AT HSCI 51 4.1. Foreign currency exposure faced by HSCI 51 4.2. Foreign currency transactions at HSCI 52 4.3. HSCI’s exposure elasticity 52 4.4. Analysis of HSCI’s delta 53 4.5. Determining the foreign exchange exposure 55 4.5.1. Imports payment system at HSCI 55 4.5.2. Estimating the forex exposure 56 4.5.3. Tracking Chart of Honda
Bibliography: * BOOKS * C.Jeevanandham, Foreign Exchange and Risk Management, Himalaya publication house, Sultan Chand and Sons, 2007, Tenth Edition, Page 159 to 170. * John C. Hull, Options, Futures and Derivatives, PHI , 2008, Seventh Edition, Page 212 to 217 * P.G * http://www.rbi.org.in/Scripts/publications.aspx/Report on Currency and Finance 2008-09(June 9,2010) * http://burnyourfuel.com/2010/04/05/news/honda-siel-cars-india-march-2010-sales-figure/ (July 27, 2010) * http://www.iief.com/Research/CHAP10.PDF, Neeraj Gambhir and Manoj GoelForeign Exchange Derivatives Market in India -Status and Prospects, August 11, 2010 * http://finance.wharton.upenn.edu/weiss/wpapers/00-3.pdf, * www.vsb.org/docs/valawyermagazine/jj01kelley.pdf(Foreign Currency Risk: Minimizing Transaction Exposure, August 11, 2010 * http://rbidocs.rbi.org.in/rdocs/content/PDFs/76927.pdf ,Comprehensive guidelines on derivatives, June 9, 2010 * http://usd.cer24.com/inr/history/2010-07-01,volatility rates for INR/USD currency , 28 jul 2010) * http://www.acrobatplanet.com/non-fictions-ebook/ebook-corporate-interest-rate-risk-management-derivatives-australia-empirical-res, puput ,15 aug2010 * PAPERS/ JOURANLS/ LEGAL DOCUMENTS * Honda’s Annual Report, 2008-09 * Records of back dated forward contracts and options, july 28, 2010 * Srinivasan Sayee & Youngren Steven `Using Currency Futures to Hedge Currency Risk’, july28,2010