Page 222 - 5.2 i. Manac Finance ITC Summarised Notes

THE TREASURY FUNCTION

Internal hedging techniques

• Leads and lags: speed up (leading) or slow down

(lagging) payments/ receipts when a currency is

expected to move in a particular direction

• Netting of intercompany transactions as then only

the net amount needs to be hedged

• Diversification of foreign customers and suppliers

(range of currencies) – the entity will be less

susceptible to currency risk as not all currencies

move in the same direction at the same time.

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