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FX risk management: beyond hedging
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#1 Posted : 26 October 2017 10:12:51
Rank: Administration



Joined: 2009-11-30
Posts: 249
This discussion refers to the article:

FX risk management: beyond hedging

Treasury teams need to take a more holistic approach to managing FX risk.
Read the full article...
@StahrTreasury
#2 Posted : 26 October 2017 10:12:51
Rank: New member



Joined: 2014-02-27
Posts: 5
As former FX-Trader for a global Bank I may understand this “holistic” approach of hedging currencies by considering aspects like annual business cycles, net-positions and so on. But as Corporate Treasurer since 20 years I would strongly refrain from such an approach. It is just too risky and for some “holistic” ideas not allowed under IFRS or US Gaap if a company apply hedge accounting. Because get rid of p&l volatility for FX is quite important for most of the corporates. And many large corporates do so. A Treasurer never ever should make a guess what’s going on with the exposure in the future . He is obliged to mitigate risks based on pure facts. Also known as transactional risk. Even there are many parameters which can have a negative impact on hedges. Everything else is economical risk and is very difficult to be calculated. There is just too much uncertainness about all the complex impacts on underlying and fx-rates. Last but not least: IFRS or US Gaap should be reviewed carefully before entering into any new hedging strategy. Best regards, Thomas Stahr
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