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Managing FX risk during the Euro crisis
Author(s) -
Makar Stephen,
Wang Li,
Alam Pervaiz
Publication year - 2012
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.21809
Subject(s) - hedge , cash flow , recession , context (archaeology) , business , accounting , financial crisis , hedge fund , risk management , financial system , economics , monetary economics , finance , macroeconomics , ecology , paleontology , biology
Since the start of the Great Recession in 2007, treasurers have been challenged to manage cash flow uncertainty—including the impact of exchange rate (FX) changes. Today, FX risk management has become particularly important for companies doing business in the Eurozone. But current hedge ac‐counting practices cannot accurately predict future cash flows in FX risk management. In this article, the authors help treasurers and CFOs analyze those accounting deficiencies in the Eurozone context. They also discuss the strategic implications of the hedge accounting problem. © 2012 Wiley Periodicals, Inc.