Question
a) The depreciation of the Ghana Cedi against the major trading currencies is a source of worry to many businesses who import raw materials as
a) The depreciation of the Ghana Cedi against the major trading currencies is a source of worry to many businesses who import raw materials as inputs for production. It is also a major challenge in the petroleum sector as it is one of the inputs in the price build-up. You have been recently appointed as a consultant on Financial Risk management and your tasks include advising government and private sector on how to manage foreign exchange rate risk. You are required to give your first public lecture on how the private sector should position itself to reduce the effect of foreign exchange rate risk and also what options are available to government to insulate the economy against exchange rate risk. Your presentation should cover; i) The sources of exchange rate risk in the private sector ii) Business practices that can be adopted to mitigate exchange rate risk iii) Financial instruments available on the international market that can be used by government to hedge exchange rate risk. (10 marks)
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