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McGraw-Hill/Irwin International Business, 6/e© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Volkswagen’s Hedging Strategy
•Volkswagen, Europe’s largestcarmaker, reported a 95% drop in2003 fourth-quarter profits•The cause for the slump had manyreasons but two causes stood out:
-The unprecedented rise in the valueof the Euro against the dollar -Volkswagen’s decision to onlyhedge 30% of its foreign currencyexposure as opposed to the 70% ithad traditionally hedged