How should a multinational company manage foreign currency risks? Examines transactional, translational and competitive exposures. Describes General Motors’ corporate hedging policy and its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a single framework for the exchange risks that General Motors must manage, there are situations in which the company must take into account deviations from prescribed guidelines. D. .. Read more »

How should a multinational company manage foreign currency risks? Examines transactional, translational and competitive exposure. Describes General Motors’ corporate hedging policy and its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a single framework for the exchange risks that General Motors must manage, there are situations in which the company must take into account deviations from prescribed guidelines. Describes three such situations: large exposure to the Canadian dollar with adverse accounting consequences, GM exposure to the Argentine currency devaluation as widely expected, and the impact of the depreciation of the Japanese yen against the dollar. To executable spreadsheets (courseware) to receive, please contact our Customer custserv@hbsp.harvard.edu
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from
Mihir A. Desai,
Mark F. Veblen
Source: Harvard Business School
28 pages.
Release date: 01 March 2004. Prod #: 204024-PDF-ENG
Foreign Exchange Hedging Strategies at General Motors HBR case solution