In Tokyo on Monday, 24 April 2006, the U.S. dollar trade fell to a three-month low against the yen, with more than its weakness from Friday in New York, where he had fallen more than two yen (1.75%). Mr. Teruhide Osawa, President of OSG Corporation in Japan (OSG), a multinational cutting tool producer, was following the foreign exchange market on his computer screen that Monday and was very surprised to see that the yen had 1.75% estimated in a day. He wondered whether such a major change wou … Read more »

In Tokyo on Monday, 24 April 2006, the U.S. dollar trade fell to a three-month low against the yen, with more than its weakness from Friday in New York, where he had fallen more than two yen (1.75%). Mr. Teruhide Osawa, President of OSG Corporation in Japan (OSG), a multinational cutting tool producer, was following the foreign exchange market on his computer screen that Monday and was very surprised to see that the yen had 1.75% estimated in a day. He wondered if such a major change would result in problems for the company’s business. Faced with large fluctuations in the yen-dollar exchange rate, he called the head of the Support Center Finance Group and asked to analyze it, and report on how the OSG foreign currency transaction exposure was measured, and how they are managed. He specifically asked the manager how the company is currently hedge its foreign currency risk. The Finance Group gave a presentation at a meeting of the Board of Directors on 29 May, 2006. They explained that it. Transaction to short-term exposure, a variety of methods to eliminate hedge at different costs for the company After the presentation by the Finance Group, members of the board got into a heated discussion.
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Mitsuru Misawa
Source: University of Hong Kong
22 pages.
Publication Date: Dec 18, 2006. Prod #: HKU618-PDF-ENG
OSG Corporation: risk hedging transaction exposures HBR case solution

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