How Can Managers Minimize Exchange Rate Risk?
In general, managers should
1 Have central control of exposure to protect resources efficiently and ensure that each sub unit adopts the correct mix of tactics and strategies
2 Distinguish between transaction and translation exposure on the one hand, and economic exposure on the other hand
3 Attempt to forecast future exchange rates
4 Establish good reporting systems so the central finance function can regularly monitor the firm’s exposure position
Produce monthly foreign exchange exposure reports