Business English Lesson – Advanced Level''''s archiveCurrency Valuation and Strategic Hedging ppt

Business English Lesson – Advanced Level's archive
Currency Valuation and Strategic Hedging
1. The US dollar's current weakness is making hedging
risk very for corporates in North America, while their
counterparts in Europe don't have the same advantage.

abundant
attractive
egregious
elusive
2. However, an active and strategic approach to hedging
means that Europeans should not be , Didier
Hirigoyen exhorts.

determined
deterred
detracted
distracted
3. The current weakness of the US Dollar major
currencies has revived the debate around net investment
hedging as well as earnings translation risk.

and
re
versus
with
4. Although North American companies' hedging
opportunities are now generally benefitting from
favourable market conditions, European corporations may
not have to away from managing these risks.

balk
flinch
leap
shy
5. A solid currency valuation assessment combined with a
structured hedging framework can lead to a successful
programme; this approach however a slightly more
dynamic methodology than is common in the corporate
world.

commands
demands
regulates
stipulates
6. Between internal policy constraints and accounting
regulation, most companies have chosen to be mostly
passive, implementing hedging strategies in a systematic
manner or not at all, but rarely into consideration
market conditions in the decision making process.

bringing
drawing
placing
taking
7. While it is fair for companies to state that they are not
involved in the currency market to 'punt' on the direction of
exchange rates, it is also fair to say that hedging should
not be done in either.

a limbo

an instant
a trice
a vacuum
8. While understanding the mechanisms and
characteristics of the FX market is key to a sound hedging
policy, remaining aware of currency valuation and
including it in the risk management process can add value
to a firm

as a last resort
at a glance
in the long run
on the scorecard
9. The PPP currency valuation model, modified to reflect
the assumption that a currency pair has, on average,
traded at fair value over the 20 years preceding the
measurement point, offers some into the long-term
behaviour of exchange rates and their tendency to mean-
revert on an inflation adjusted basis.

insight
oversight
overview
purview
10. For example, the EUR/$ exchange rate has, over the
past 14 years, in a broad band around the PPP
implied rate.

glided
hovered

soared
stooped