As we continue our Numerix webinar series on the best ways to manage your FX exposures, Udi Sela, Vice President strategia forex vincente fernandez Client Solutions at Numerix, examines a renowned multinational US company with receivables in multiple currencies and an US Dollar-denominated cost base. Sela specifically demonstrates a range of sophisticated FX option techniques, which can be used to hedge foreign currency exposures.
Looking particularly at the Google business case—a dollar-denominated company with significant foreign-denominated exposure—Mr. Sela’s comparative analysis examining the possible option strategies Google could have used—and exploring the initial cost, potential upside and worse case scenarios for these strategies—we come to see that it would make the most sense for a multi-national company like Google, with its ongoing receivables, to have used a combination of average rate, partial barrier forward and basket options to most effectively hedge its foreign exchange exposures. We also observe that the Target Redemption Forward strategy could not be viewed as an effective hedge, since it would be way too risky. In Search of the Winning Hedging Strategy: A Look at Different FX Hedging Options. Heading FX Exposures: Which Strategy is Right for Your Business? Click to contact the Numerix Marketing Team and we’ll put you in touch with the right Numerix expert or team member for the job. Cargill is working to nourish the world.
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