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How to manage a short-term currency fluctuation risk such as Brexit Logo cgma

  Mark D. Mishler, CPA, and Samantha White |   Free |   AICPA and CIMA |   24 Jun 2016 |   CGMA Magazine

This article discusses factors related to managing short-term currency fluctuation risk.

Topics covered:
  • Management accounting: Business: Strategy, Foundational
  • Management accounting: Technical: Risk management & internal control: Risk management policies & procedures, Foundational

5 Comments/Reflections

Vishal Patnaik

Vishal Patnaik Sep 2018

The topic has made me aware about hedging and the two types of foreign currency risks - transaction risk and translation risk. It has also guided me to go through the right standard IAS21 to review this further.A nice to know article.
Tendai Nyakurimwa

Tendai Nyakurimwa Aug 2017

The article is quite informative and gives practical steps that help in preparing for risk associated with  rates movements. I enjoyed reading it and will help me going forward in scanning the environment. 
The article made sense to me because i have been involved in calculating translation reserves.
I hope to impart the knowledge to my colleagues as well
Jamie Wesencraft

Jamie Wesencraft Aug 2016

I very topical article, with the illustrated example being particularly useful.

I found it unusual that my own organisation does not hedge foreign currency and we have been left exposed post-Brexit as we report in USD but have significant income generation here in the UK.

I will look more into some reading on currency hedging - it is a topic i find interesting and could be of value in my current role, future positions, and is relevant given the increasing uncertainty in the global economic environment.
Lalit Bhandary

Lalit Bhandary Aug 2016

CIMA covers this topic very well in its program. Its nice to read such topic cause concept out at sight is out of mind. This article helps to refresh our knowledge.
Tendai Nyakurimwa

Tendai Nyakurimwa Aug 2016

This is a very important article as the world is littered with risks. A company needs to have a strategy to counter short-term fluctuation risk. The article has really reminded me of the need to be on the look out for these risks and how to tackle them.

I have been involved in coming up with a Hedging Policy at The Cotton Company of Zimbabwe. I have also done revaluation of receivables and payables denominated in a foreign currency every month and at each balance date.

I hope to keep this information for use in any relevant future engagements.