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Painful Conversions

As currency risk intensifies, companies of all sizes are taking steps to protect cash flows.

Kate O'Sullivan, CFO Magazine
April 1, 2010

Good article!

A great quick overview of the perils of currency exposures! One practical aspect which was not mentioned and which often drags us practitioners into heated debates, is at which level one should hedge the exposure. Contract level, Business unit or divisional level, or corporate level? They all have their pros and cons. The main advantage of corporate level hedging is that one only hedges net overall exposure, which saves cost, but instead you will find yourself XL-ing like mad to obtain the net after hedge individual contract performance. A small note for those new to this: the chart says EUR/USD but in fact it shows USD/EUR. One of those fx customary anomalies one has to get used to.

Posted by Joakim Henriksson | April 04, 2010 01:50 pm

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