question archive A Canadian based company that exports auto parts to Europe notices that the foreign exchange rate between the Canadian Dollar and the Euro has tipped into a range that is unfavourable
A Canadian based company that exports auto parts to Europe notices that the foreign exchange rate between the Canadian Dollar and the Euro has tipped into a range that is unfavourable
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A Canadian based company that exports auto parts to Europe notices that the foreign exchange rate between the Canadian Dollar and the Euro has tipped into a range that is unfavourable. In the past, the company has neglected to examine this FX risk but it now wants to analyse the FX risk and establish an FX policy. What are the steps that the company needs to follow to accomplish this goal?
This is about applying what you learnt about FX management in Module 3, Unit 2. There is no right or wrong answer to the question, and you have 2-weeks to answer, but you must answer the question - in order to earn the 2% mark for it.
Again, as you read through everyone's answers, you will gain some insight into the different ways by which this could be done. Obviously, to get the most out of the discussion, don't just copy everybody else
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To establish an FX policy, the Canadian based company should do the following;
- State the clear purpose at to why it needs an FX policy
- Appoint employees who will take the lead responsibility in the policy formulation activity
- Allow the appointed team to formulate the FX policy
- Implement the FX policy
- Monitor and evaluate the FX policy
Step-by-step explanation
Being clear on the purpose that the policy will serve will prevent the company's employees from being confused along the process of formulating the desired policy.
