Winner International: Managing FX Risk with Derivatives Strategies
VerifiedAdded on 2023/04/23
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Case Study
AI Summary
This case study examines Winner International Limited's approach to hedging foreign exchange and commodity price risks using derivatives. The company faces currency exposure due to its multinational operations, involving procurement from Poland and the Czech Republic, and sales in Germany and the United Kingdom. The analysis suggests strategies for managing Polish Zloty and Czech Koruna exposures, recommending the use of currency futures for their reliability and lower counterparty risk. It also explores commodity hedging strategies for live cattle and hot buns, advising the company to book futures based on market trend analysis. The study emphasizes offsetting foreign liabilities against foreign income to reduce conversion costs and leveraging stable global currencies like Euro and Sterling. The aim is to minimize losses from currency fluctuations, control production costs, and maximize profitability, with the assumption that foreign revenue sufficiently covers foreign purchase costs. Desklib offers a wide range of solved assignments and past papers to aid students in their studies.
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