nternational commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.
Sunday, April 06, 2008
Friday, April 04, 2008
I ( heart ) DMOZ...Why I Joined And Why I Love It
Back in our initial post, we mentioned that this site would serve as a forum for editors to share their stories. Why they joined. What they get out of the experience and why it matters to them.Below is the first of many posts from our editors talking about why they joined the community.
Everyone say "hi" to ODP Editor Laigh : )
*************************************************************** As a person who has recently been accepted as an editor in the ODP community I would like to share my perspective.
The background to me applying was simple. I have written a few websites over the last two or three years and of course during this time I had come across the ODP. The actual idea of many people from around the world coming together in a huge community really intrigued me and over time I decided that I wanted to become part of that community and try to be involved in making the Internet a better place. I would like to point out at this time that NONE of my websites are listed in DMOZ and I declared ALL of them on my applications and I have declared ALL of them on the internal system, so believe me my motives weren't and aren't to do with my own sites, they are genuinely and honestly to do with being part of the project. I would also like to say that as a person new to the community I am not being influenced by any other editors in any way and I am writing this as a reflection of my own true feelings and experiences. I do not wish to make any political points or otherwise but just to pass on my experiences as somebody who has just started to edit. I first applied to join the ODP as an editor about a year ago and at that time I was rejected. The rejection notice did not have any specific comments on it and I assumed this was because the reason was contained within the list that the e-mail already provided. I decided to leave my application for a while and as usual, life took over and I didn't re-apply until mid August 2007.
I received a rejection e-mail within about two days but this time I had a comment on it. It basically said that I had not filled in a certain part of the form correctly. I had a look and could have kicked myself. The form said in black and white what I needed to do but I hadn't done it right.
I had read the form religiously several times but this showed me that I had been looking at the form but not really reading it. I applied again with the parts fixed and within two days I received my joining e-mail to my complete surprise. I immediately signed in and it was then that light began to dawn on me about the enormity of the actual community and the work that they do. It also dawned on me very quickly the reasons that you can only apply for a small category. There is so much to learn on how the system works and how to get started. I actually read for two days before I started to actually edit anything. I quickly became enthralled with the community and now after two months or so have completed about 3000 edits. I really enjoy being part of this community and hope to be part of it for a long while. To those reading this that are thinking of or have applied, there is a HUGE amount of help to be had. I have had nothing but encouragement from many folk in the ODP. Everybody from Metas to newbies like me have been eager and willing to help. The rules and regulations within the ODP are to make it run smoothly and in my honest opinion they are not hard to follow. They are just there to make it work. As I have been told before in the community, "The only daft question is the one you didn't ask" All that is left for me to say is that if you are thinking of applying to be an editor, please do. It is a great experience, definitely worthwhile and brings a great deal of personal satisfaction.
Everyone say "hi" to ODP Editor Laigh : )
*************************************************************** As a person who has recently been accepted as an editor in the ODP community I would like to share my perspective.
The background to me applying was simple. I have written a few websites over the last two or three years and of course during this time I had come across the ODP. The actual idea of many people from around the world coming together in a huge community really intrigued me and over time I decided that I wanted to become part of that community and try to be involved in making the Internet a better place. I would like to point out at this time that NONE of my websites are listed in DMOZ and I declared ALL of them on my applications and I have declared ALL of them on the internal system, so believe me my motives weren't and aren't to do with my own sites, they are genuinely and honestly to do with being part of the project. I would also like to say that as a person new to the community I am not being influenced by any other editors in any way and I am writing this as a reflection of my own true feelings and experiences. I do not wish to make any political points or otherwise but just to pass on my experiences as somebody who has just started to edit. I first applied to join the ODP as an editor about a year ago and at that time I was rejected. The rejection notice did not have any specific comments on it and I assumed this was because the reason was contained within the list that the e-mail already provided. I decided to leave my application for a while and as usual, life took over and I didn't re-apply until mid August 2007.
I received a rejection e-mail within about two days but this time I had a comment on it. It basically said that I had not filled in a certain part of the form correctly. I had a look and could have kicked myself. The form said in black and white what I needed to do but I hadn't done it right.
I had read the form religiously several times but this showed me that I had been looking at the form but not really reading it. I applied again with the parts fixed and within two days I received my joining e-mail to my complete surprise. I immediately signed in and it was then that light began to dawn on me about the enormity of the actual community and the work that they do. It also dawned on me very quickly the reasons that you can only apply for a small category. There is so much to learn on how the system works and how to get started. I actually read for two days before I started to actually edit anything. I quickly became enthralled with the community and now after two months or so have completed about 3000 edits. I really enjoy being part of this community and hope to be part of it for a long while. To those reading this that are thinking of or have applied, there is a HUGE amount of help to be had. I have had nothing but encouragement from many folk in the ODP. Everybody from Metas to newbies like me have been eager and willing to help. The rules and regulations within the ODP are to make it run smoothly and in my honest opinion they are not hard to follow. They are just there to make it work. As I have been told before in the community, "The only daft question is the one you didn't ask" All that is left for me to say is that if you are thinking of applying to be an editor, please do. It is a great experience, definitely worthwhile and brings a great deal of personal satisfaction.