Question

How is Novagold affected by foreign exchange risk?

Answer 1

Before understanding the affect of foreign exchange risk of Novagold we need to understand about the business of Novagold. Novagold is in the the business of exploration, acquisition and development of precious metal. Due to that Novagold is exposed to the exchange rate risk where it is doing business in different countries which imposed the risk of currency fluctuation.

Due to doing business around the globe there is risk of currency appreciation and depreciation so that it affect the business of Novagold, it has to hedge it risk by entering into currency swap or foreign exchange swap which can reduce the exposure of fluctuation of these currency.