28 Nov
Hedging Through Currency Futures | CA Final SFM
If the company that is planning a hedge the foreign exchange risk, is an importer and has to settle the payment in foreign currency, it will have the need to buy such foreign currency.
If the importer company decides to hedge the foreign exchange risk through currency futures, then it should take a long position in currency futures, if the currency future contract is given in foreign currency. Inversely, it should take short position if currency futures contract is available in local currency.
If the company is an exporter and has to receive the amount in foreign currency, it will have the need to sell such foreign currency.
If the exporter company decides to hedge the foreign exchange risk through currency futures, then it should take a short position in currency futures, if the currency future contract is given in foreign currency. Inversely, it should take long position if currency futures contract is available in local currency.
Tips by CA Harish Wadhwani (Scored 93 marks in SFM)
February 02, 2021
Securitization CA Final SFM (Strategic Financial Management)
February 02, 2020
Things you should do before your CA Final Exams
April 04, 2019