Exchange Rate Risk

470 Words Jan 9th, 2018 2 Pages
US Dollar vs Euro

2012 Euro
$90,000 value
2011 Euro
$90,000 value
2010 Euro
$90,000 value
14Sep
0.7739
69,651

13Sep
0.7763
69,867

12Sep
0.7811
70,299

11Sep
0.7821
70,389

10Sep
0.7802
70,218

9-Sep
0.7801
70,209

8-Sep
0.7874
70,866

7-Sep
0.7927
71,343

31Dec

0.7722
69,498
0.7545
67,905
30Dec

0.7738
69,642
0.7609
68,481
29Dec

0.7671
69,039
0.7578
68,202
28Dec

0.7652
68,868
0.7612
68,508
27Dec

0.7654
68,886
0.7618
68,562
26Dec

0.7664
68,976
0.7618
68,562
25Dec

0.7664
68,976
0.762
68,580

There has been significant changes in the international economy and politics that has led to uncertainty regarding the direction of foreign exchange rates that lead to volatility and the need to hedge foreign exchange rate risk and interest rate changes (Nobile, 2005). If a price is quoted ahead of time for a contract, the price may not be appropriate at the time of the actual agreement or the performance of the contract because of fluctuations in the foreign currency. The interest rate will have a differential between the two country currencies. A business or individual investor that buys foreign currency to purchase…
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