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Foreign Currency Risk

A U.S. based multi-national corporation, which manufactures and exports aluminum for shipment to a Spanish import company, must be aware of the risks involved, when the rate of exchange between the euro and U.S. dollar changes from day to day. In this case, if the contract is payable in 90 days, and on the date of signing, it is worth $750,000, this means that the foreign currency exchange rate is .75 euros to one U.S dollar. However, if the exchange rate declines to .65 euros, then the contract is only worth $650,000.

Foreign Exchange Risk Mangement

Foreign Currency Hedge

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