国际金融市场管理Ch11Managing_Transaction_Exposure教材教学课件.pptVIP

Limitations of Hedging Time Forward Rate Spot Rate Repeated Hedging of Foreign Payables when the Foreign Currency is Appreciating Costs are increasing … although there are savings from hedging. Hedging Long-TermTransaction Exposure MNCs that are certain of having cash flows denominated in foreign currencies for several years may attempt to use long-term hedging. Three commonly used techniques for long-term hedging are: long-term forward contracts, currency swaps, and parallel loans. Hedging Long-TermTransaction Exposure Long-term forward contracts, or long forwards, with maturities of ten years or more, can be set up for very creditworthy customers. Currency swaps can take many forms. In one form, two parties, with the aid of brokers, agree to exchange specified amounts of currencies on specified dates in the future. A parallel loan, or back-to-back loan, involves an exchange of currencies between two parties, with a promise to re-exchange the currencies at a specified exchange rate and future date. Hedging Long-TermTransaction Exposure Hedging Long-TermTransaction Exposure Year Spot Rate Long-Term Hedging of Foreign Payables when the Foreign Currency is Appreciating Savings from hedging 0 1 2 3 1-yr forward 2-yr forward 3-yr forward Alternative Hedging Techniques Sometimes, a perfect hedge is not available (or is too expensive) to eliminate transaction exposure. To reduce exposure under such a condition, the firm can consider: leading and lagging, cross-hedging, or currency diversification. Alternative Hedging Techniques The act of leading and lagging refers to an adjustment in the timing of payment request or disbursement to reflect expectations about future currency movements. Expediting a payment is referred to as leading, while deferring a payment is termed lagging. Alternative Hedging Techniques When a currency cannot be hedged, a currency that is highly correlated with the currency of concern may be hedged instead. The stronger the positive correlatio