Foreign Exchange Management for the Small Firm

Abstract

This article is directed to those firms which might have experienced the need for a coherent approach to foreign exchange management but have not yet defined such a policy. The article explains the basics of a foreign exchange policy for small firms and provides some practical advice on hedging foreign exchange risk. The major issues dealt with are defining the foreign exchange exposure for the small firm, estimating the relative strength or weakness of the foreign currencies involved, and explaining some techniques for hedging exchange risk especially related to small firms.