Currency exposure management

Abstract

Few long range planners can be unaware that exchange rates have been unstable since the late 1960s. After the relative stability of the Bretton Woods era, the world is now in a state of floating currencies, in which exchange rate fluctuations have become an important factor in the business environment. Companies should recognize different types of currency risk exposure and define their corporate objectives, including an assessment of whether the corporate position is to be defensive or whether some well-controlled exposure is desirable.