Exchange rate risk

Hiral.s

Par 100 posts (V.I.P)
Exchange rate risk refers to the risk that a company's perfromance will be affected by exchange rate movments. For example, a MNC company may incur loss if the exchange rate of that host country depreciated, on the other hand it can do profit if the rate of the host country appreciated.

MNC's closely monitor their financial operation to determine how they are exposed to various forms of exchange rate risk. As a result, financial managers must understand how to measure the exposure of their company to exchnage rate fluctuations. It will help them to determine whether and how to protect their companies from that exposure.

So, what do u think, Should exchange rate risk be considered or ignored?
 
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