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Your company has operations in Greece (such as factories and offices) that could not be brought...

Your company has operations in Greece (such as factories and offices) that could not be brought back shortly. In other words, it is not possible to avoid doing business in Greece or with Greek companies in the short run. As an international manager, what would you suggest the company doing to minimize the exchange risk? Use course concepts to offer your suggestions.

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Answer #1

In order to minimize exchange risk the company to adopt following measures:

  1. Forward contract: developing a forward contract helps in fixing the exchange rates in advance if the money transfer has to occur in future. This contract helps in eliminating the risk of exchange rate fluctuations.
  2. Limit order: under this, parties get to set exchnage rate of their choice which is better than the existing rate. It helps in setting minimum exchange rate which will be used to carry out tranfers.
  3. Other important methods to adopt are: money market hedge, forex swaps, and multi currency accounts
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