M.Com. (Business Management) / After years of international isolation, South Africa has been re-admitted to the international fold. For the country's business community this entails new opportunities, as well as threats. International markets and finance opened up during the past year. It also led to South Africa signing the latest GAIT agreement. This will, enable foreign exporters to have access to the local market in the future, it will also encourage competition amongst local companies that previously mainly produced for domestic consumption. New markets will have to be exploited. These new opportunities and threats create new risks for companies entering these new markets. An important component of these new risks is the volatility in the foreign exchange market. Import and export companies receive and make payments in foreign. currencies. Unexpected movements in exchange rates can influence a company's profitability and competitiveness. Due to the size of the foreign exchange market, it is the most liquid and volatile market in the world. To minimise the risk and seize opportunities in adverse foreign exchange movements, currency exposure must be managed properly. Although integrated treasury management proves to be a successful approach in most industrial countries, it is a relatively new science, in South Africa. A large number of financial instruments exist for the hedging of foreign currency exposure. In South Africa' these options are limited, due to exchange. control regulations and this also hampers the number of hedging possibilities. Under different market conditions different hedging strategies and instruments can provide different results. There is one guarantee that a given instrument or strategy will result in the optimal hedge. It might even result in more inherent risks. Risk management is a dynamic activity within an organisation and calls for educated decisions to minimise risk and utilise opportunities.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:13456 |
| Date | 18 March 2015 |
| Creators | Botes, Michael Johannes |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Johannesburg |
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