Abstract
M.Com. (Investment Management)
In the research of currency risk management it is important to
note that currency risk management forms part of the overall risk
management of business and authorised currency dealers. various
hedging instruments exist with which currency risk can be managed.
This study deals with the origin and the influence of currency
fluctuations on business, and the management of such risk.
Various factors exist which affect the level of exchange rates.
In South Africa the most important factors affecting these rates
are the gold price, the level of the American dollar and the
degree of political stability. Since most of these factors do
not fall within South Africa's control, but are mostly influenced
by external factors, exchange rates can only be managed to a
certain extent. This is possible through Reserve bank
interference.
Fluctuation in exchange rates exposes local companies and
currency dealers to currency risk. Several techniques and
instruments can be employed in currency risk management.