Dealing with volatile foreign currencies is something many business that work internationally or maintain overseas offices. While there is a certain amount of risk inherent in dealing with foreign currencies, there are also ways for smart treasury departments to mitigate this FX risk. Here is what you need to know about FX risk.
Several different types of fluctuations affect FX risk. According to professionals, the most volatile areas are revenues, the cost of purchasing goods overseas, and, more frequently, a combination of the two.
Fortunately, there are steps you can take to mitigate your risk. Some common methods for managing risks related to foreign currencies include FX exposure netting and hedge accounting. If you are entering the world of international business, consider scheduling a professional consultation to implement these management tools at your business.
Image Source: John Morgan
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