Currency Hedging - MGT 448

Rising trends toward the globalization of goods and services over the last few years means that more and more firms must now make decisions about their foreign exchange exposure. In addition, this need is provoked by the increasingly volatile foreign exchange markets. Exchange rate risk exists when a firm's revenues and expenses are valued in different currencies. Exchange rate risk naturally has an upside as well as a downside, but the experience of most developing countries has usually been depreciation against more stable currencies (Matsukawa). Currency hedging, or management of fo…