Risk in International Trade

One of the most important issues for the exporter is currency value. Fluctuations in the exchange rate have three times the impact of a change in any of the major cost components – labour, raw materials, profits and overheads. It may come as a surprise to the reader to learn that, three years after the introduction of the euro, some sixty per cent of Ireland’s exports are priced and delivered in currencies other than the euro. When one considers that the $US has depreciated by 35% against the euro in less than two years, the importance of exchange risk management becomes obvious. The book helpfully outlines internal and external hedging mechanisms, which can be used