Hedging with Target Redemption Forward
Publication date: 1 January 2013
Abstract
This case deals with hedging and risk management in companies. Surya Textiles had significant export revenues in euros and was looking for innovative ways of hedging foreign exchange risk to make their treasury a profit centre. Target Redemption Forward which hedged the euros into dollars was an attractive option which their Chief Financial Officer wanted to try. This instrument was designed to be a net-zero-premium hedging strategy that could provide Surya with monthly hedging rates that were better than market rates. The case analyses the pros and cons of this instrument.
Keywords
Acknowledgements
This case has been written on the basis of publicly available information. Names and other identifying information have been disguised.
Citation
Varma, J.R. (2013), "Hedging with Target Redemption Forward", . https://doi.org/10.1108/CASE.IIMA.2019.000049
Publisher
:Indian Institute of Management Ahmedabad
Copyright © 2013 by the Indian Institute of Management, Ahmedabad