major project a study of foreign exchange risk mgt

1.

INTRODUCTION

1.1 EXECUTIVE SUMMARY

The purpose of FX (Foreign Exchange) market is to facilitate trade and

investment. The need for a foreign exchange market arises because of the

presence of multifarious international currencies such as US Dollar, Pound

Sterling, etc., and the need for trading in such currencies. Any individual who

had a diversified portfolio or firms operating in foreign countries and trading

in foreign currencies are supposed to encounter foreign exchange risk.

Although the foreign exchange risk is volatile and the future risk

cannot be predicted but still it can be managed. This project is aimed to

expose the various types of risk involved in foreign exchange and study some

of the foreign exchange risk management tools with regarding to firms,

institutions and individuals. These tools help in measuring and minimizing the

foreign exchange risk. They are Money Market Hedging, Currency Risk

Sharing, Insurance, Derivatives, Forward Contract, Future Contract, Swaps,

Options, and Forward Rate Agreement etc.

Each of the tools is elaborated briefly with suitable examples in

relation to the risk encountered by individuals and firms in this project.

Finally, a risk is not risk if it is anticipated.

1.2 INTRODUCTION TO THE TOPIC

What Is Exchange Risk?

Exchange risk is simple in concept: a potential gain or loss that occurs

as a result of an exchange rate change. For example, if an individual owns a

share in Toyota, the Japanese company, he or she will lose if the value of the

yen drops.

Yet from this simple question several more arise. First, whose gain or

loss? Clearly not just those of a subsidiary, for they may be offset by positions

taken elsewhere in the firm. And not just gains or losses on current

transactions, for the firm's value consists of anticipated future cash flows as

well as currently contracted ones. What counts, modern finance tells us, is

shareholder value; yet the impact of any given currency change on

shareholder value is difficult to assess, so proxies have to be used. The

academic evidence linking exchange rate changes to stock prices is weak.

Moreover the shareholder who has a diversified portfolio may find that

the negative effect of exchange rate changes on one firm is balanced by gains

in other firms; in other words, that exchange risk is diversifiable. If it is, than

perhaps it's a non-risk.

Finally, risk is not risk if it is anticipated. In most currencies there are

futures or forward exchange contracts whose prices give firms an indication

of where the market expects currencies to go. And these contracts offer the

ability to lock in the anticipated change. So perhaps a better concept of

exchange risk is unanticipated exchange rate changes.

These and other issues justify a closer look at this area of international

financial management.

Should Firms Manage Foreign Exchange Risk?

Many firms refrain from active management of their foreign exchange

exposure, even though they understand that exchange rate fluctuations can

affect their earnings and value. They make this decision for a number of

reasons.

First, management does not understand it. They consider any use of risk

management tools, such as forwards, futures and options, as speculative. Or

they argue that such financial manipulations lie outside the firm's field of

expertise. Perhaps they are right to fear abuses of hedging techniques, but

refusing to use forwards and other instruments may expose the firm to

substantial speculative risks.

Second, they claim that exposure cannot be measured. They are right --

currency exposure is complex and can seldom be evaluated with precision.

But as in many business situations, imprecision should not be taken as an

excuse for indecision.

Third, they say that the firm is hedged. All transactions such as imports or

exports are covered, and foreign subsidiaries finance in local currencies. This

ignores the fact that the bulk of firm’s value comes from transactions not yet

completed, so the transactions hedging is a very incomplete strategy.

Fourth, they say that the firm does not have any exchange risk because it does

all its business in rupees (or dollar, or whatever the home currency is). But a

moment's thought will make it evident that even if you invoice German

customers in rupees, when the mark drops your prices will have to adjust or

you'll be undercut by local competitors. So revenues are influenced by

currency changes.

Finally, they emphasize that the balance sheet is hedged on an accounting

basis--especially when the "functional currency" is held to be the dollar. The

misleading signals that balance sheet exposure measure can give are

documented in later sections.

One counter-argument is that transaction costs are typically greater for

individual investors than firms. Yet there are deeper reasons why foreign

exchange risk should be managed at the firm level. Operating managers can

make such estimates with much more precision than shareholders who

typically lack the detailed knowledge of competition, markets, and the

relevant technologies. Furthermore, in all but the most perfect financial

markets, the firm has considerable advantages over investors in obtaining

relatively inexpensive debt at home and abroad, taking maximum advantage

of interest subsidies and minimizing the effect of taxes and political risk.

Another line of reasoning suggests that foreign exchange risk

management does not matter because of certain equilibrium conditions in

international markets for both financial and real assets. These conditions

include the relationship between prices of goods in different markets, better

known as Purchasing Power Parity (PPP), and between interest rates and

exchange rates, usually referred to as the International Fisher Effect (IFE).

However, deviations from PPP and IFE can persist for considerable

periods of time, especially at the level of the individual firm. The resulting

variability of net cash flow is of significance as it can subject the firm to the

costs of financial distress, or even default.

Modern research in finance supports the reasoning that earnings fluctuations

that threaten the firm's continued viability absorb management and creditors'

time, entail out-of-pocket costs such as legal fees, and create a variety of

operating and investment problems, including underinvestment in R&D. The

same argument supports the importance of corporate exchange risk

management against the claim that in equity markets it is only systematic risk

that matters. To the extent that foreign exchange risk represents

unsystematic risk, it can, of course, be diversified away provided again, those

investors have the same quality of information about the firm as management

a condition not likely to prevail in practice.

This reasoning is supported by the likely effect that exchange risk has

on taxes paid by the firm. It is generally agreed that leverage shields the firm

from taxes, because interest is tax deductible whereas dividends are not. But

the extent to which a firm can increase leverage is limited by the risk and

costs of bankruptcy. A riskier firm, perhaps one that does not hedge exchange

risk, cannot borrow as much. It follows that anything that reduces the

probability of bankruptcy allows the firm to take on greater leverage, and so

pay less taxes for a given operating cash flow. If foreign exchange hedging

reduces taxes, shareholders benefit from hedging.

However, there is one task that the firm cannot perform for

shareholders: to the extent that individuals face unique exchange risk as a

result of their different expenditure patterns, they must themselves devise

appropriate hedging strategies. Corporate management of foreign exchange

risk in the traditional sense is only able to protect expected nominal returns in

the reference currency.

Unmanaged exchange rate risk can cause significant fluctuations in the

earnings and the market value of an international firm. A very large exchange

rate movement may cause special problems for a particular company, perhaps

because it brings a competitive threat from a different country. At some level,

the currency change may threaten the firm's viability, bringing the costs of

bankruptcy to bear. To avert this, it may be worth buying

some financial instruments which may be a useful and cost-effective way to

hedge against currency risks that have very high probabilities which, have

disproportionately high costs to the company.

1.3 INDUSTRY OVERVIEW

Brokerage firms in India

Business entities that deal with stock trading are known as brokerage firms.

The Indian broking industry is one of the oldest trading industries that have

been around even before the establishment of BSE in 1875. Despite passing

through number of changes in the post liberalization period, the industry has

found its way onwards sustainable growth. With an increasing capital market

and growing number of investors, India has a number of brokerage firms. In

Indian retail brokerage industry, the brokerage firms primarily work as agents

for buying & selling of securities like shares, stocks & other financial

instruments and earn commission for each of the transactions. Indian retail

brokerage market is growing through a wonderful phase with high growth

rate. The total trading volume of Indian brokerage companies is expected to

reach US$ 6535.7 billion by the year 2015.

The 189 equity broking firms included in the study have a total of 144,346

trading terminals, 21,013 branches/ offices, and 77,125 employees across the

country. Furthermore, almost 70% of the 189 companies profiled in the

publication reported a total sub-broker base of 37,213.

The top 10 brokerage firms in India are:

Sharekhan

Terminals- 1644

Sub Brokers- NA

No. of Employees- 3879

No. of Branches- 294

India Infoline

Terminals- 173

Sub Brokers- 173

No. of Employees- NA


Kotak Securities Ltd

Terminals- 4320

Sub Brokers- 910



Motilal Oswal Securities

Terminals- 7923

Sub Brokers- 890


No. of Branches- 63

Angel Broking

Terminals- 5715

Sub Brokers- NA


No. of Branches- NA

India Bulls

Terminals- 2876

Sub Brokers- NA



KarvyStock Broking Ltd

Terminals- 1700

Sub Brokers- 19000



Geojit Financial Services

Terminals- 627

Sub Brokers- 247



Anand Rathi Securities Ltd

Terminals- 1527

Sub Brokers- 320



Reliance Money

Terminals- 2428

Sub Brokers- 1494


No. of Branches- 14

Com De Mar Brok AM Exp Bran

pany

mat

A/c

Ope

ning

Cha

rge

gin

Mon

ey

erag

e

Intr

aday

Deli

very

(%)

C

osur

e

(for

intra

)

ches

IIFL750/

-

5000

/-

0.05-

0.50250/-

10

times2100

Kota

k

Secur

ities

750/

-

5000

/-

0.06-

0.59360/-

4

times890

ICIC

I

Direc

t

500/

-975/-

0.07

5-

0.50

450/-5

times2124

Motil

al

Oswa

l

415/

-

Not

restri

cted

0.03-

0.30300/-

4

times430

Relig

are

299/

-

5000

/-

0.02

5-

0.25

Nil20

times1837

Angel

Broki

ng

731/

-

5000

/-

0.03-

0.30300/-

4

times120

Geoji

t

650/

-Nil

0.03-

0.30Nil

20

times500

India

Bulls

900/

-Nil

0.03-

0.30Nil

20

times718

Relia

nce

Mone

y

750/

-

Not

restri

cted

0.05-

0.2550/-

5

times

1000

0

Share

khan

750/

-

5000

/-

0.03-

0.30500/-

4

times250

HDF

C

799/

-

5000

/-

0.05-

0.50500/-

5

times650

Global Brokerage firms

1. J.P. Morgan

2. Goldman Sachs

3. Smith Barney Citigroup

4. Lehman Brothers

5. Prudential Equity Group

6. Merrill Lynch

7. Bank of America Securities

8. UBS

9. BB&T Capital Markets

10.Piper Jaffray

Financial Markets

The financial markets have been classified as

1. Cash market

2. Derivatives market

3. Debt market

4. Commodities market

Cash market, also known as spot market, is the most sought after amongst

investors.

Stock Exchanges

NSE

The National Stock Exchange (NSE) is India's leading stock exchange

covering various cities and towns across the country. NSE was set up by

leading institutions to provide a modern, fully automated screen-based trading

system with national reach. The Exchange has brought about unparalleled

transparency, speed & efficiency, safety and market integrity. It has set up

facilities that serve as a model for the securities industry in termsof systems,

practices and procedures.

NSE has played a catalytic role in reforming the Indian securities market in

terms of microstructure, market practices and trading volumes. The market

today uses state-of-art information technology to provide an efficient and

transparent trading, clearing and settlement mechanism, and has witnessed

several innovations in products & services viz. demutualization of stock

exchange governance, screen based trading, compression of settlement cycles,

dematerialization and electronic transfer of securities, securities lending and

borrowing, professionalization of trading members, fine-tuned risk

management systems, emergence of clearing corporations to assume

counterparty risks, market of debt and derivative instruments and intensive

use of information technology.

BSE

Bombay Stock Exchange is the oldest stock exchange in Asia What is now

popularly known as the BSE was established as "The Native Share & Stock

Brokers' Association" in 1875. Over the past 135 years, BSE has facilitated

the growth of the Indian corporate sector by providing it with an efficient

capital raising platform.

Today, BSE is the world's number 1 exchange in the world in terms of the

number of listed companies (over 4900). It is the world's 5th most active in

terms of number of transactions handled through its electronic trading system.

And it is in the top ten of global exchanges in terms of the market

capitalization of its listed companies (as of December 31, 2009). The

companies listed on BSE command a total market capitalization of USD

Trillion 1.28 as of Feb, 2010.

BSE is the first exchange in India and the second in the world to obtain an

ISO 9001:2000certifications. It is also the first Exchange in the country and

second in the world to receive Information Security Management System

Standard BS 7799-2-2002 certification for its BSE On-Line trading System

(BOLT). Presently, we are ISO 27001:2005 certified, which is a ISO version

of BS 7799 for Information Security.

The BSE Index, SENSEX, is India's first and most popular Stock Market

benchmark index. Exchange traded funds (ETF) on SENSEX, are listed on

BSE and in Hong Kong. Futures and options on the index are also traded at

BSE.

Regional stock exchanges in India

There are 23 stock exchanges in India. Among them two are national level

stock exchanges namely Bombay Stock Exchange (BSE) and National Stock

Exchange of India (NSE). The rest 21 are Regional Stock Exchanges (RSE).

AhmedabadStock Exchange

BangaloreStock Exchange

BhubaneshwarStock Exchange

CalcuttaStock Exchange

CochinStock Exchange

CoimbatoreStock Exchange

DelhiStock Exchange

GuwahatiStock Exchange

HyderabadStock Exchange

JaipurStock Exchange

LudhianaStock Exchange

Madhya PradeshStock Exchange

MadrasStock Exchange

MagadhStock Exchange

MangaloreStock Exchange

Meerut Stock Exchange

OTC Exchange Of India

Pune Stock Exchange

Saurashtra KutchStock Exchange

UttarPradeshStock Exchange

VadodaraStock Exchange

Regulatory body for Indian Securities market (SEBI)

In 1988 the Securities and Exchange Board of India (SEBI) was established

by the Government of India through an executive resolution, and was

subsequently upgraded as a fully autonomous body (a statutory Board) in the

year 1992 with the passing of the Securities and Exchange Board of India Act

(SEBI Act) on 30th January 1992.

The basic objectives of the Board were identified as:

To protect the interests of investors in securities;

To promote the development of Securities Market;

To regulate the securities market and

For matters connected therewith or incidental thereto.

Some insights of this industry

1. Around 17% equity broking companies have 80% of broking terminals

Equity broking terminals consisting of NEAT, BOLT and CTCL licenses are the

key in determining the size of an equity broking company. According to our study,

17% of the 189 profiled companies have 80% of the total trading terminals

provided by such companies.

2. New kids on the block

A majority of the 189 broking firms featured in this publication (approximately

85%) entered the business in the decade following 1990s. The financial sector

reforms, which commenced in that decade, opened up opportunities in the

securities markets, especially for new entrants.

3. Employee break-up

4. More than 50% of companies are engaged in three market segment

5. Western region has highest number of companies

6. NSE has a share of 66% among total shares traded

7. NSDL witnesses surge in dematerialized shares

8. Volatility in stock markets

In FY10, the global stock markets displayed lesser volatility compared with

FY09. Month-wise, average daily volatility in the Indian benchmark indices

was the highest in May 2009. The lowest volatility in the benchmark indices

was noticed during Mar 2010. The annualised volatility of BSE Sensex

decreased from 43.6% in FY09 to 29.2% in FY10. A similar trend was also

observed for the S&P CNX Nifty, which recorded annualised volatility of

29.4% in FY10, compared with 41.5% the previous year.

9. Overall profit of broking companies soar; small companies see a turnaround

Net profit of broking companies

2.2COMPANY OVERVIEW (INDIA INFOLINE)

The IIFL (India Infoline) group, comprising the holding company, India

Infoline Ltd (NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is

one of the leading players in the Indian financial services space. IIFL

offers advice and execution platform for the entire range of financial

services covering products ranging from Equities and derivatives,

Commodities, Wealth management, Asset management, Insurance, Fixed

deposits, Loans, Investment Banking, Gold bonds and other small savings

instruments. IIFL recently received an in-principle approval for Securities

Trading and Clearing memberships from Singapore Exchange (SGX)

paving the way for IIFL to become the first Indian brokerage to get a

membership of the SGX. IIFL also received membership of the Colombo

Stock Exchange becoming the first foreign broker to enter Sri Lanka.

IIFL owns and manages the website, www.indiainfoline.com, which is

one of India’s leading online destinations for personal finance, stock

markets, economy and business.

IIFL has been awarded the ‘Best Broker, India’ by FinanceAsia and the

‘Most improved brokerage, India’ in the AsiaMoney polls. India Infoline

was also adjudged as ‘Fastest Growing Equity Broking House - Large

firms’ by Dun & Bradstreet. A forerunner in the field of equity research,

IIFL’s research is acknowledged by none other than Forbes as ‘Best of

the Web’ and ‘…a must read for investors in Asia’. Our research is

available not just over the Internet but also on international wire services

like Bloomberg, Thomson First Call and Internet Securities where it is

amongst one of the most read Indian brokers.

A network of over 2,500 business locations spread over more than 500

cities and towns across India facilitates the smooth acquisition and

servicing of a large customer base. All our offices are connected with the

corporate office in Mumbai with cutting edge networking technology.

The group caters to a customer base of about a million customers, over a

variety of mediums viz. online, over the phone and at our branches.

History & Milestones

2011

Launched IIFL Mutual Fund.

2010

Received in-principle approval for membership of the Singapore Stock

Exchange.

Received membership of the Colombo Stock Exchange

2009

Acquired registration for Housing Finance

SEBI in-principle approval for Mutual Fund

Obtained Venture Capital license

2008

Launched IIFL Wealth

Transitioned to insurance broking model

2007

Commenced institutional equities business under IIFL

Formed Singapore subsidiary, IIFL (Asia) Pvt. Ltd

2006

Acquired membership of DGCX

Commenced the lending business

2005

Maiden IPO and listed on NSE, BSE

2004

Acquired commodities broking license

Launched Portfolio Management Service

2003

Launched proprietary trading platform Trader Terminal for retail customers

2000

Launched online trading through www.5paisa.com Started distribution of life

insurance and mutual fund

1999

Launched www.indiainfoline.com

1997

Launched research products of leading Indian companies, key sectors and the

economy Client included leading FIIs, banks and companies

1995

Commenced operations as an Equity Research firm

http://www.indiainfoline.com/

IIFL (India Infoline Ltd) - Corporate Structure

Board of directors

Mr. Nirmal Jain is the founder and Chairman of India Infoline Ltd. He is

a PGDM (Post Graduate Diploma in Management) from IIM (Indian Institute

of Management) Ahmedabad, a Chartered Accountant and a rank-holder Cost

Accountant. His professional track record is equally outstanding. He started

his career in 1989 with Hindustan Lever Limited, the Indian arm of Unilever.

During his stint with Hindustan Lever, he handled a variety of

responsibilities, including export and trading in agro-commodities. He

contributed immensely towards the rapid and profitable growth of Hindustan

Lever’s commodity export business, which was then the nation’s as well as

the Company’s top priority.

He founded Probity Research and Services Pvt. Ltd. (later re-christened India Infoline) in

1995 perhaps95; perhaps the first independent equity research Company in India. His work

set new standards for equity research in India. Mr. Jain was one of the first entrepreneurs in

India to seize the internet opportunity:witht with the launch of www.indiainfoline.com in

1999. Under his leadership, India Infoline not only steered through the dotcom bust and one

of the worst stock market downtrends but also grew from strength to strength.

Mr. R.Venkataraman, Managing Director ,India Infoline Ltd

Mr. R. Venkataraman, Co-Promoter and Managing Director of India Infoline

Ltd, is a B.Tech (electronics and electrical communications engineering, IIT

Kharagpur) and an MBA (IIM Bangalore). He joined the India Infoline Board

in July 1999. He previously held senior managerial positions in ICICI Limited,

including ICICI Securities Limited, their investment banking joint venture with

J P Morgan of US, BZW and Taib Capital Corporation Limited. He was also

the Assistant Vice President with G E Capital Services India Limited in their

private equity division, possessing a varied experience of more than 19 years in

the financial services sector.

Vision:

To be the ‘most respected company in the financial services space’.

Mission:

To educate, empower, enrich and enhance customer investment skills set through

research, knowledge and delightful service.

Values:

Team Work

Mutual Respect

Execution

Transformation

Transparency

Accountability

SWOT ANALYSIS

The Company is uniquely positioned as a supplier of High Chrome Mill Internals

on a global scale, on account of the following competitive strengths:

Focus on the combination of Metallurgy, Design and Applications.

Comprehensive solutions based approach, as distinct from supply of

commodity products.

Focus on technology research and development.

Worldwide presence in more than 60 countries, being directly in front of the

customers through a network of overseas marketing Subsidiaries in the

Middle East, Europe and USA and warehouse facilities.

Low cost of production.

A management team comprising of Technocrats, Professionals and

Consultants having rich experience in High Chrome Mill Internals industry.

WEAKNESS/THREATS

Inability to scale up the capacities rapidly owing to extremely high

importance of absolutely zero failure rate of the products expected by

the customers, requiring close monitoring of the quality.

Issues related to logistics, particularly with the increasing volumes of the

products.

Current global slowdown in the cement Industry-particularly in the EU

and USA-which may impact the short term performance of the

Company.

The focus on the Global Mining Industry may lead to pressure on the

margins in the short term due to the typical entry related competitive

factors.

Lack of a banking arm to complete the bank broker-depository chain.

OPPORTUNITIES AND STRATEGIES

To maintain and further strengthen our capabilities of Research &

Development activity.

To consider tapping the significant opportunity offered by China as a

Market for the mill internals consumed by the Cement and Utility

Industry.

To focus more on strategic relationship/ commercial partnerships with

international groups.

CHAPTER 3

RESEARCH DESIGN

RESEARCH DESIGN

INTRODUCTION

Foreign exchange risk is the exposure of a company’s financial strength to the

potential impact of movements in foreign exchange rates. The risk is that adverse

fluctuations in exchange rates may result in a reduction in measures of financial

strength. It is acknowledged that specific foreign exchange risk practices may differ

among banks depending upon factors such as the institution’s size, and the nature

and complexity of its activities. However, a comprehensive foreign exchange risk

programme should deal with, at a minimum, good management information

systems, contingency planning and other managerial and analytical techniques.

TITLE OF THE STUDY

“ A STUDY ON FOREIGN EXCHANGE RISK MANAGEMENT”

STATEMENT OF THE PROBLEM

The main role of the exchange rate is to allow international regulations related to

international trade: an exporter wants to be paid in foreign currency, because they

need currency to pay its employees or its suppliers, while the importer does not have

a priori that its own currency to pay. Every time there is an international commercial

transaction, there will be a foreign exchange transaction.

The exchange rate fluctuations will affect the prices of export goods. For example,

if a product sold in France and the USA is 100 €, with an exchange rate of $ 1.25

per euro, therefore it will cost $ 125 (100 x 1.25) to U.S. consumers . A decline in

the exchange rate at $ 1.10 per euro will drop the export price at 110 € (100 x 1.10),

while a rise in the exchange rate will rise. Conversely, a well made in the USA, sold

in France and worth $ 100, cost 80 € (100 / 1.25) to French consumers in the first

case and 90.10 € (100 / 1.10) in the second case. Thus, any decline in the exchange

rate of the national currency promotes exports and imports disadvantage, and vice

versa for an increase in the exchange rate. So there is a possibility for a country to

improve its balance of trade (and hence growth) if it gets a drop in the value of its

currency. Countries that consistently under-estimate their currencies to facilitate

their exports are accused of making monetary protectionism.

To prevent this form of protectionism that countries may agree on a system of fixed

exchange rates - such as the Bretton Woods (1944-1971) or the European Monetary

System (1979-1992). But some economists point out that a flexible exchange system

allows you to balance trade. The reasoning is based on the functioning of the foreign

exchange market. If a country has a deficit in its current payments, this means that

the country lacks foreign currency to pay for purchases with the rest of the world,

and must be requested in the foreign exchange market which lowers the value of its

currency in relation to other currencies. Accordingly, the exchange rate of the

national currency down, which encourages exports and restricts imports, which,

ultimately, the foreign trade balance. The mechanism is reversed in case of current

account surplus.

PURPOSE OF THE STUDY

The purpose of FX market is to facilitate trade and investment. The need for a

foreign exchange market arises because of the presence of multifarious international

currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such

currencies.

Foreign exchange, or forex, is critical to transact international business. Foreign

exchange refers to the process of trading domestic for foreign currency at

fluctuating exchange rates. Foreign exchange markets have been established to

facilitate this process. Private citizens, traders, and government officials all monitor

the foreign exchange market carefully to gauge the implications of particular

currency values upon the world economy. You should identify foreign exchange

risks, before making financial decisions.

3.1 OBJECTIVES OF THE STUDY

This project attempt to study the complexities of the foreign exchange market. The

purpose of this study is to get a better idea and comprehensive details of foreign

exchange risk management.

SUB OBJECTIVES

To know about the various concept and technicalities in foreign

exchange.

To study the various types of risks related to foreign exchange when a firm,

institution, individual is exposed to deal with foreign currencies.

To get the knowledge about the traditional risk management tools such as

Money Market Hedging, Currency Risk Sharing, Insurance, Derivatives,

Forward Contract, Future Contract, Swaps, Options, Forward Rate

Agreement etc.

These and other issues justify a closer look at the area of Foreign Exchange

Risk Management.

LIMITATION OF THE STUDY

Time constraint

Resource constraint.

Bias on the part of interviewer

SOURCE OF DATA

The sources of data may be classified into primary sources and secondary source.

a) Primary Data:

The primary data was collected through interviews of professionals and

observations.

b) Secondary Data:

The secondary data was collected from books, newspapers, other

publications and internet and browses taken from the company.

DATA ANALYSIS

The data analysis was done on the basis of the information available from various

sources and brainstorming.

major project a study of foreign exchange risk mgt

Documents