The strategies I will be using are derivatives or forward contracts which specify an amount, exchange rate with date of the current exchange so both parties can plan to mitigate currency risk. Derivatives are contracts between two parties that specify conditional under which payment are made between two parties to reduced foreign exchange risk exposure.

After reading the article, I understand that there are four exposure types including transaction, economic, translation and strategic. For sample, my current company are based in US but our clients are locate in China to ensure to minimize foreign exchange risk and economic risk, we set the currency rate to be USD under the commercial agreement with monthly term therefore even the exchange rate changes, our contract guarantees that we will receive the same amount of dollar. On other sides, our head office is in Spain therefore will be annual FX exchange rate given to reduce the volatility of the foreign currency exchange rates. As a manager, I think is very important to maintain a foreign exchange risk management policy under internal control. *Answer questions below from reading paragraph here. Subject is Accounting

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