Abstract
Globalization has opened a world market that allows us to trade. These exchanges are now counted in billions of Swiss francs (CHF). (Grossbard, 2023) Indeed, many companies buy and sell currencies every day in order to settle their transactions. For many companies, the price of foreign currencies has an impact on their results. This impact is not controllable and can be very volatile and unpredictable. Companies are all looking to minimize the uncertainty of foreign exchange losses and therefore find the best ways to avoid such accidents. Several means exist such as the technical strategy of currency hedging. This paper will illustrate how an international company works when it comes to forwards. There will be a fictional case study that will show the impact of the war in Ukraine in currency hedging.
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