Motors Corporation‚ the world’s largest automaker‚ has an extensive global outreach‚ which places the firm in competition with automakers worldwide‚ and subjects itself to significant exchange rate exposure. In particular‚ despite most of its revenues and production being derived from North America‚ depreciating yen rates pose problems for the firm indirectly through economic exposure. While GM possesses ‘passive’ hedging strategies for balance sheet and income statement exposures‚ management has not
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Executive Summary Aspen has become a public company with more risk adverse investors who want to invest in the core business of the firm and not assume any foreign exchange risk. Foreign exchange risk is a core risk to Aspen’s business because they have many customers outside of the United States. We believe that transferring this risk to the customers would limit Aspen’s growth on the foreign markets: Aspen should keep its current marketing strategy‚ which includes credit installment payments and
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Determinants of Indian Exchange Rate Submitted To: Dr. S K Mathur Associate Professor of Economics Department of Humanities and Social Sciences Indian Institute of Technology Kanpur Submitted By: Sharad Gupta (10666) Abstract This Paper attempts to find out the determinant of INR-USD exchange rate. We want to see the interdependence of Exchange rate on some variables like Inflation‚ Money Supply‚ Foreign Reserve‚ Fiscal Deficit and Stock market. This will also attempt to analyze
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predicts exchange rates. Managers of multinational corporations are interested in accuracy of such foreign exchange prediction models as it directly impacts their activities relating to exposure management‚ hedging‚ arbitraging‚ investing and financing decisions. Policymakers frequently monitor exchange rates to better understand their impact on trade positions‚ and consequently‚ domestic employment‚ business and revenue prospects. Nowadays‚ more attention is being focused on foreign exchange rate prediction
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Cross Border Capital Flows Introduction The global crisis‚ in its evolving phases since 2007‚ has vividly demonstrated the extent to which cross border capital flows tie economies together. From the spread of the crisis from the United States to the global economy in 2008‚ to the jitters caused across the world‘s financial markets by recent tensions in the Euro Area‚ with surges of inflows into fast growing emerging markets‚ and more recently into ―safe haven‖ currencies‚ it is clear that the
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should it occur as he expected. The DM did appreciate from 3.2DM/$ to 2.3DM/$. The total cost to Lufthansa dropped from DM1.6 billion to DM1.375M‚ a savings of DM225 million‚ by using the partial forward cover. However given the significant volatility in DM/$ rate‚ the put option method would have saved an additional DM129 million for a total savings of DM354 million. Had DM appreciated less than 12%‚ the partial forward cover would have saved Lufthansa more money than put option. Detailed Analysis
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sectors of the economy and then it may spread to other countries through contagion and other regional spill-over effects. He noted that three general forms of financial instability have constituted most forms of recent financial crises: (1) short term volatility‚ (2) medium term misalignments including excessive international capital flows‚ and (3) contagion. We are going to analyse the Argentina peso crisis‚ Mexican peso crisis‚ Brazilian and the Zimbabwean Dollar crisis. The Argentina peso crisis:
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EVOLUTION OF EXCHANGE RATE REGIME: IMPACT ON MACRO ECONOMY OF BANGLADESH by Liza Fahmida A project submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Juthathip Jongwanich Dr. Yuosre Badir Nationality: Bangladeshi Previous Degree: Master in Finance and Banking University of Dhaka Bangladesh Scholarship Donor: Bangladesh Bank Asian Institute of Technology School
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yen/dollar exchange rate‚ the new distribution agreement with Mitsukoshi gave rise to high exchange-rate exposure for Tiffany to bear. The exposure goes in the following two ways: Economic Exposures. From 1983 to 1993‚ the yen/dollar exchange rate was along a down turn path (see Exhibit 1). In the past‚ Tiffany wholesaled its products to Mitsukoshi. Since the wholesale transactions were denominated entirely in dollars‚ yen/dollar exchange rate fluctuations did not represent a source of volatility for Tiffany’s
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IntroductionThis report is to check the hedging strategy that was used and lead to the huge loss of CITIC Pacific Limited and point out the importance of managing foreign exchange exposure through select appropriate hedging strategies. The huge loss of CITIC Pacific Limited and its cause is discussed in the first part. The importance of hedging and the tools of hedging are respectively reviewed in part two and part three. Finally‚ suggestions are given out on how to design proper hedging strategies
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