NOM, Prénom : Farid Saad

Groupe: MSc Cacf

Date : 13 mai 2019

The thesis topic:

The foreign exchange risk management.

• Keywords: Foreign Exchange Risk, Foreign Exchange Exposure, Foreign Exchange Risk Hedging,
Financial Hedging, Operational Hedging
• Outline:
• Diapo 1: Name, Topic, Outline.
• Diapo 2: Why is it important to manage the foreign exchange ?
• Diapo 3: Literature Review
• Diapo 4&5: Methodology 1
• Diapo 6: bibliography ( APA)
 THE TOPIC CHOICE JUSTIFICATION:
WHY IS IT IMPORTANT TO MANAGE THE FOREIGN EXCHANGE RISK ?

Today, all companies face, or will soon be, the question of currency risk. This strong trend is related
to the acceleration of globalization and the development of Internet commerce, which is improving
among all businesses, even the smallest, to engage in international trade.

All companies buying or selling in a currency other than the euro are affected by currency risk.
These are real and numerous, whether economic risks, transaction or conversion. The appreciation
of the foreign currency is a threat to importers, and its depreciation represent a risk for exporters.
Any business owner must therefore anticipate this risk, which is particularly difficult to grasp as
currency risk, because it is a risk that can be controlled.

The strategy to be established must therefore help the company to:

-Neutralize the impact of currency fluctuations on trading margins.

-Immunize the company against currency speculation.
-Anticipate cash inflows and outflows related to foreign currency purchases.
-Get better exchange rates.
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Literature Review

The company can take different approaches when faced with the risk exchange rate: it can choose not to
cover itself, selectively hedging or hedging on all transactions. However, not covering exposes the
company to the risk of losing money.
According to H.HUTIN(2002), they are two types of hedging techniques ( Internal or external )
Internal hedging techniques have been perfected over the past few years to meet the needs of businesses.
And they are as follows: the choice of billing currency, leads and lags, indexation clauses in contracts,
bilateral and multilateral internal clearing, cross-currency and cross-currency swaps, cash discount and cash
coverage.

External hedging techniques adopted by companies around the world, to limit the currency risk, mainly the
transaction risk, are used more than the internal techniques. Some of the external techniques have
developed mainly in in recent years, such as hedges in the futures, options markets foreign exchange and
currency swaps. These external hedging instruments are not equivalent. Indeed, we distinguish two big
families of products; Firm hedging products and optional products.

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METHODOLOGY
Documentary
exploratory
study

The observed object : the population-sample Instrument : questionnaire

Method : Field protocol

Observation and collection of informations

Elementary sorting : basic sorting – cross sorting

Results
interpretation

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Documentary exploratory study :
Several methods can be used to carry out an exploratory study, the most common are: use of secondary data, and
review of literature specialized, interviews (directive, semi-directive) and case studies. We will resort to the first method.
The sources of information we have used are mainly documentary studies. These studies contain useful information
either in a way specific or global,

Sampling method: « convenience sample »

the study can only be extrapolated to the population involved. The disadvantage of a sample of non-probabilistic
convenience is that it is possible to describe the population actually involved in the survey only after doing it.

Criteria for choosing the sample:

The selection of our "convenience sample" is not fortuitous it is based on a certain number of criteria which make it
possible to ensure the reliability of the results obtained.
These criteria are as follows: A minimum degree of involvement in exports: this first criteria allowed us to limit our
study to two levels:
- The company concerned can not be included in the "convenience" sample only if it exports more than 10% of its total
turnover;
- The "involved" company must be an exporter on a regular basis and not occasionally, and then it can be importing or
not.

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 BIBLIOGRAPHY

- Cardineau, G., & Portier, G. (1987). Comment comprendre et mieux utiliser le marché des changes. [Paris]: Dunod.
- Chevalier, A., & Vigneron, P. (1984). La gestion financière des groupes. Paris: Dunod.
- Coulbois, P. (1979). Le Change. Paris: Editions Cujas.
- Groves, R., Fowler, F., Couper, M., Lepkowski, J., Singer, E., & Tourangeau, R. (2009). Survey methodology. Hoboken,
N.J.: Wiley.
- Hutin, H. (2002). Toute la finance d'entreprise en pratique. Paris: Éditions d'Organisation.

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