Scribd Logo
Upload

Welcome to Scribd!

  • IBM Seminar

    Uploaded by

    Thowfi
    13 views3 pages
    Foreign exchange exposure refers to the degree to which a company is affected by changes in exchange rates. There are three main types of foreign exchange exposure: translation exposure, which is the risk of change in a company's financial position due to exchange rate fluctuations; economic exposure, which is the impact of exchange rate changes on a firm's future cash flows; and transaction exposure, which is the risk from foreign currency-denominated receivables and payables. Companies can manage these exposures through actions like matching foreign assets and liabilities, adjusting international operations and trade levels, and controlling foreign currency debt levels.

    Original Description:

    IBM MBA

    Original Title

    IBM seminar

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Foreign exchange exposure refers to the degree to which a company is affected by changes in exchange rates. There are three main types of foreign exchange exposure: translation exposure, which is the risk of change in a company's financial position due to exchange rate fluctuations; economic exposure, which is the impact of exchange rate changes on a firm's future cash flows; and transaction exposure, which is the risk from foreign currency-denominated receivables and payables. Companies can manage these exposures through actions like matching foreign assets and liabilities, adjusting international operations and trade levels, and controlling foreign currency debt levels.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    13 views3 pages

    IBM Seminar

    Uploaded by

    Thowfi
    Foreign exchange exposure refers to the degree to which a company is affected by changes in exchange rates. There are three main types of foreign exchange exposure: translation exposure, which is the risk of change in a company's financial position due to exchange rate fluctuations; economic exposure, which is the impact of exchange rate changes on a firm's future cash flows; and transaction exposure, which is the risk from foreign currency-denominated receivables and payables. Companies can manage these exposures through actions like matching foreign assets and liabilities, adjusting international operations and trade levels, and controlling foreign currency debt levels.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    04-11-2022

    FOREIGN EXCHANGE
    EXPOSURE
    BY,
    THOWFIKA S

    FOREIGN EXCHANGE EXPOSURE

    Foreign exchange exposure


    refers to the degree to which
    a company is affected by the
    changes in the exchange
    rates.
    04-11-2022
    04-11-2022

    Translation exposure

    • Translation Risk is the


    risk of change in the
    company’s financial
    position (assets,
    liabilities, equity) due to
    exchange rate changes.
    • It is overcome by the
    MNC to avoid by
    matching its foreign
    liabilities with its foreign
    assets.

    Economic exposure
    Economic exposure refers to the impact exchange rate fluctuations can
    have on a firm’s future cash flows.

    It is overcome by
    • corporate restructuring
    • increasing or reducing sales in new or existing foreign
    markets.
    • increasing or reducing its dependency on foreign suppliers,
    • establishing or eliminating production facilities in foreign
    markets, and/or
    • increasing or reducing its level of debt denominated in foreign
    currencies.

    You might also like