MINAKSHI FINANCIAL CURRENCY REPORTS

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The management of risk arising from different foreign currency issues when an enterprise enters foreign markets for a cell phone company based in USA and India. The two currencies Dollar and INR exhibit currency fluctuations which significantly impacts the company's operational revenues, cost of manufacturing device expense and impact on the overall profitability of the firm. The company management can make use of natural hedging financial instruments to secure favourable trade position in the transactions related to currency risk..

The instruments involve matching of operational revenues and business expenses within the same currency. For example, if the American company decides to manufacture their production of cell phones to India they can invoice their sales revenues in Indian currency while sourcing direct materials and input labours in Dollars for Exchange gains. This mechanism can help reduce the company's overall exposure to frequent currency fluctuations..

The company can use financial hedging instruments such as forward contracts, options and futures to hedge against monetary transactions from currency risk. The provision of entering into these contracts allows the company to get into an agreement at an agreed price and lock in the effective exchange rates for future transactions thereby protecting the company's resources from adverse currency movements..

The company can also diversify their offerings which can shorten the company's currency exposure. The company should not be relying solely on one currency and diversify their overall currency needs with multiple countries across different currencies. The diversification strategy aims to reduce the company's reliance on a single currency and minimizes the impact of adverse currency movements on the overall financial performance. The company can advantage from maintaining good relationships with corporate banks and financial institutions to provide valuable insights and advice on local currency markets..

The company can constantly monitor and analyse different currency markets and should stay informed about geopolitical events of the concerned economies, overall trend analysis of overall economic indicators and take provisions under central bank policies to influence lower exchange rates. The company needs to implement strategic hedging positions, diversify overall currency exposure, maintain good strategic partnerships and relationships with financial institutions for staying informed about overall financial currency markets..

Stephens, J. J. (2003). Managing currency risk: Using Financial derivatives. John Wiley & Sons. Bishev, G., & Boskov, T. (2015). Principles of managing currency risk by companies. Hicks, A. (2000). Managing currency risk using foreign exchange options. Woodhead Publishing. Tiwary, A. R. (2019). Study of currency risk and the hedging strategies. Journal of Advanced Studies In Finance (JASF), 10(19), 45-55..