MANAGING TRANSACTION EXPOSURE

Abstract

In the period of crisis the volatility of foreign exchange is one of most importantelements to be consider in the risk management strategy at corporate level .The paper will focus onthe main types of foreign exchange exposure, the role of hedging in managing the currency risk andthe measurement of transaction exposure. The risk management in practice is illustrated by a casestudy designed to capture and contrast the effects of different types of options for hedging thetransaction exposure.foreign exchange exposure, currency risk, hedging.