ABSTRACT
Developing the program to manage foreign currencies is the most difficult step of currency management. Many questions must be addressed. Where is the company at risk? Which currencies should be managed? Which exposures should be managed? How? Who manages them? Does he or she manage alone, or should this be a team effort? Is hedging to be centralized or decentralized? What, exactly, are the goals? A good place to start when planning a program is to analyze how the company is impacted by foreign exchange. To achieve this, exposure may be redefined as follows:
Foreign currency exposure is the sensitivity of some corporate objective variable to changes in foreign exchange rates.
