Hedging In Currency Futures: A Singapore Dollar Case Study

Srinivasan, Bobby; Negandhi, Anant
May 1985
Asia Pacific Journal of Management;May1985, Vol. 2 Issue 3, p170
Academic Journal
In recent months the volatility of currency values, especially the changing value of the US Dollar against the Swiss Franc. Deutsche Mark, Japanese Yen and the Singapore Dollar has significantly increased the foreign exchange risk exposure of multinational corporations. This article looks at several different strategies which a corporate treasurer can consider for minimizing his risk exposure. Finally, two different borrowing strategies in the forward market which are based upon local currency (Singapore Dollar) and foreign currency (US Dollar) borrowing are compared. The results show that substantial cost savings can be obtained by selective borrowing.


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