Currency Exposures and Derivatives : Risk, Hedging, Speculation and Accounting - A Corporate Treasurer's Handbook

Huge losses have been incurred by several companies in India and abroad on derivatives used for "hedging" interest rate and currency exposures, in the recent past. This has exposed a major weakness: lack of understanding of derivatives and their usage. There has been an acute lack of clarity even among professionals on understanding what constitutes hedging, and the difference between risk reduction and cost reduction. The issue of hedge effectiveness, especially with the mandatory use of Accounting Standard 30 and disclosure norms from 2011 onwards, becomes critical for company auditors as well.

In this context, Currency Exposures and Derivatives: Risk, Hedging, Speculation and Accounting-A Corporate Treasurer's Handbook, a distillate of the author's rich experience in advising companies, banks and teaching B school students and executives,comes as a topical and much needed offering for corporate treasurers, chartered accountants, auditors, bankers, and students and faculty of management schools.

A companion volume to his book Cash and Derivatives Markets in Foreign Exchange, this book covers:

• Types of currency exposures and their effects on the bottom-line of businesses
• Exchange rate movements
• Risk management issues and policies for corporate treasuries
• Use and misuse of derivatives
• Provisions of AS 11, AS 16 and AS 30 related to the accounting issues and the rules for establishing hedge effectiveness

Praise for Currency Exposures and Derivatives
Foreword
Preface
List of Tables
List of Graphs
List of Boxes

Chapter 1 : Managing Currency exposures
Chapter 2 : Exchange Rate Movements-I USD: INR Exchange Rate
Chapter 3 : Exchange Rate Movements-II Convertible Currencies
Chapter 4 : Hedging, Trading and Risk Management Regulatory and Governance Issues
Chapter 5 : Risk Management Policies
Chapter 6 : Use and Misuse of Derivatives
Chapter 7 : Accounting of Foreign Exchange Transactions AS II, AS 16 and AS 30

Index