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Fluctuation of Exchange Rates

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What factors contribute to the fluctuation of exchange rates? Discuss. What is the best way for a multinational corporation to hedge against foreign currency risk?

What are some differences between hedging and forward contracts?

What is an example of a recent merger or acquisition in the service industry or western geographic market? How was value created by the combination of the two firms?

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This posting discusses the factors responsible for the fluctuation of exchange rates. It also explores the differences between hedging and forwards contracts.

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What factors contribute to the fluctuation of exchange rates? Discuss. What is the best way for a multinational corporation to hedge against foreign currency risk?
There are several reasons for interest rate fluctuation, there is the law of one price, there is a need for purchase power parity and changes in interest rates(Fisher effect). The other reasons are a change in the business environment, fluctuation in the stock markets, political changes, economic data, government influences and change in productivity of an economy. So, there are numerous reasons why exchange rates ...

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Hatim Baxamusa, MBA
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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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