1. Since HSBC does business with the Peoples Republic of China and has substantial holdings of Chinese...

Question:

1. Since HSBC does business with the People’s Republic of China and has substantial holdings of Chinese yuan (renminbi) on hand, what risk does this pose for the bank?
2. How could HSBC manage its currency risk?
3. As the British retail banks are merged to achieve cost savings and economies, do this increase or decrease the barriers to entry for foreign banks wishing to do business in the EU?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...