Currency Risk Management and Covid 19

Authors

  • M. V. S. Kameshwar Rao Associate Professor, Xavier Institute of Management & Research, Mumbai

DOI:

https://doi.org/10.33516/maj.v55i5.34-38p

Keywords:

No Keywords.

Abstract

COVID 19 is a bolt from the blue, to the already ailing world economy. Lockdowns, and disruptions of global supply chains, have impacted growth prospects of economies in various countries. Reshuffling of portfolios by global investors, declining oil prices, medium term uncertainity, and “exit China†motivations have increased volatility in currency markets. Indian Rupee is relatively stable, yet there is no room for complacency. It is not appropriate to assume that central banks might protect currency volatility, and historical assumptions of currency forecasting models need to be revisited. While natural hedging, currency invoicing and risk sharing contracts could be still effective, other currency risk management approaches, like medium term, anticipatory, and selective hedging, focussing on budgeted exchange rates, revenue and cost volatility, need to be changed. Post COVID 19, firms need to focus more on short term, actual, and full hedging of currency risks, focussing on liquidity, and cashflow volatility.

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Published

2020-05-31

How to Cite

Kameshwar Rao, M. V. S. (2020). Currency Risk Management and Covid 19. The Management Accountant Journal, 55(5), 34–38. https://doi.org/10.33516/maj.v55i5.34-38p

Issue

Section

Special Article

References

Alan, C. Shapiro, Peter Moles, Dr. Jayanta Kumar Seal, 2016, “International Financial Management†Wiley India Pvt. Ltd.

Rajwade, A.V., 2014, “Currency Exposure & Derivativesâ€, McGraw Hill Education (India) Pvt. Ltd.

Other Readings from:

www.imf.org

www.rbi.org

www.treasury-management.com

www.kyriba.com,

www.economist.com

www.bloomberg.com

www.pwc.com

https://home.kpmg/in/en/home/insights

https://ctmfile.com/sections/category/covid-19

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