01998cas a2200241 a 4500 AALejournalIMF004623 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451865158 1018-5941 BD-DhAAL BD-DhAAL Papaioannou, Michael. Exchange Rate Risk Measurement and Management : Issues and Approaches for Firms / Michael Papaioannou. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (20 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Measuring and managing exchange rate risk exposure is important for reducing a firm's vulnerabilities from major exchange rate movements, which could adversely affect profit margins and the value of assets. This paper reviews the traditional types of exchange rate risk faced by firms, namely transaction, translation and economic risks, presents the VaR approach as the currently predominant method of measuring a firm's exchange rate risk exposure, and examines the main advantages and disadvantages of various exchange rate risk management strategies, including tactical versus strategical and passive versus active hedging. In addition, it outlines a set of widely accepted best practices in managing currency risk and presents some of the main hedging instruments in the OTC and exchange-traded markets. The paper also provides some data on the use of financial derivatives instruments, and hedging practices by U.S. firms. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2006/255 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/255/001.2006.issue-255-en.xml IMF e-Library