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Hedging vs natural hedging (1 Viewer)
- Thread starter WrittenLoveLetters
- Start date
astroman
Well-Known Member
- Hedging is the process of minimising the risk of currency fluctuations.
- Natural hedging – range of natural hedges adopted by KOHLER BIOGENETICS LTD are:
- Establishing offshore subsidiaries and arranging for import payments + export receipts
denominated in same foreign currency. Therefore, the losses from movement in exchange
rate are offset by gains from others.
- Implementing marketing strategies that attempt to reduce price sensitivity of exported
products. Also, insisting on both import + export contracts denominated in AUD. This
effectively transfer risk to the importer/buyer.
- Natural hedging – range of natural hedges adopted by KOHLER BIOGENETICS LTD are:
- Establishing offshore subsidiaries and arranging for import payments + export receipts
denominated in same foreign currency. Therefore, the losses from movement in exchange
rate are offset by gains from others.
- Implementing marketing strategies that attempt to reduce price sensitivity of exported
products. Also, insisting on both import + export contracts denominated in AUD. This
effectively transfer risk to the importer/buyer.