Foreign Exchange Hedging Strategies at General Motors Transactional and Translational Exposures Mihir A Desai Mark F Veblen
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“Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures” Foreign exchange (forex) is a global market where currencies from different countries are traded, and it is an essential tool to manage foreign currency risks for businesses. Foreign exchange is an essential asset for the international business community. pop over to this site It helps in securing foreign currency assets and liabilities, and providing flexibility in foreign exchange. One of the main benefits of forex hedging strategies is that they offer financial protection
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I was fascinated by General Motors’ (NYSE: GM) efforts to develop a highly effective foreign exchange (FX) hedging strategy. The company had been facing significant financial risks associated with its global operations, especially in emerging economies such as China and Brazil. As of March 2015, General Motors was already experiencing a 70% decline in sales in China, despite strong local production and the growth of China’s urban middle class. This negative impact could translate to lower revenues in Europe and other global mark
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Foreign exchange (forex) hedging is the purchase or sale of foreign currencies to effectively manage risks associated with fluctuations in the spot foreign exchange rates. The company decided to introduce this strategy at General Motors. This case study will look at the benefits of this strategy in the company’s foreign exchange positioning. Foreign exchange (forex) is one of the most important foreign currencies used for trade and finance, as it is used extensively globally. In the United States, the dollar is the primary currency in international
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– Foreign Exchange Hedging Strategies at General Motors Transactional and Translational Exposures – Background: General Motors – Target Product: Automobile – Hedging Strategies: Hedging the Transactional Exposure – Hedging Strategies: Hedging the Translational Exposure – Hedging Strategies: Hedging the Structural Exposure – Analysis: Impact on Financial Strength – Analysis: Impact on Firm Performance – Analysis: Financial Impact
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Title: Foreign Exchange Hedging Strategies at General Motors Executive Summary: In 2017, General Motors Company launched a series of initiatives to strengthen its global market presence. The initiatives included the launch of General Motors brand in China and establishing a new joint venture with the Chinese automaker Wuling Motors Company (Sino-Daimler). This new venture will offer the first Wuling branded electric and fuel cell vehicles in China. To mitigate currency risk, General Motors implemented hed
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I am one of the key members of the team at General Motors charged with hedging foreign exchange transactions for a variety of activities. My responsibilities include, among others, preparing and monitoring all major foreign exchange exposures, and helping to manage any unhedged transactions. One of the most common problems I have faced in my role has been to manage a company’s exposures to changes in foreign exchange rates. This is especially difficult in the context of an automotive manufacturer, which frequently has exposures to currencies related to specific regions where the company is involved