Analysis of the Administration of Foreign Exchange Risk

While in Honduras we are still not very familiar with these concepts, there are many advantages offered by derivatives, especially mind if used adequately, can not only help us meet the goals of profitability, but also significantly reduce exposure to risk in more ways than one risk positions. For this case we focus on the analysis of the advantages of using futures and options for risk management of an importing company, compared to traditional techniques of foreign exchange to purchase daily market prices. We must answer two basic questions: What are the elements that allow companies to establish hedges as a mechanism vital to ensure the development of entrepreneurial activity? What economic impact may be the use of mechanisms for exchange risk management in the profits of the company? To achieve the answers we need to have conceptual knowledge of derivatives, their main characteristics, advantages and disadvantages of use according to market expectations, based on the context of a company whose turnover has a significant impact of exchange rate risk resulting from the import of raw materials and has defined policies and procedure for the activity of risk management.

The dream and the need for importing or exporting any company is to have access to a covered estrategiaque allows currency risk to which they are exposed to such institutions. By applying a hedging instrument of change, including steps to obtain favorable results are: the identification of risk, having a broad knowledge of the services offered for coverage, a proper evaluation of the alternatives and choosing the most appropriate and the application at the right time. It is important to choose the most appropriate method of coverage, but that does not completely eliminate the losses that may result in poor management of exchange rate risk, the damages can be minimized after a correct view of the hedging instrument application.