Currency Risk Management for Multinational Corporations: Focus on Latin America and the Caribbean

 

Audience: Senior Executives
Duration: 4 hours
Location: Miami Business School, University of Miami

Overview

As corporations grow their presence across nations, it is extremely important that they access the cheapest capital possible across countries and carefully manage their liquidity to match investment needs. Mismanagement of currency risk can put pressure on profit margins and erode market share. Consider the volatility in the Brazilian Real against its trading partners:

Currency Risk

This seminar will cover three important topics of multinational currency risk management:

  1. Theory of exchange rates:

  2. An understanding of the prevailing forces that may cause currency rate fluctuations including:
    1. Monetary policy of developed nations.
    2. Economic growth and stability of trading partners.
    3. Country specific concerns for Latin America and the Caribbean: inflation, political climate, current account deficit, foreign direct investments.

  3. Corporate currency risk management strategies:
    1. Financing strategies.
    2. Credit Risk and Derivative trading.
    3. Investment strategies.

The topic is especially important given the U.S. rate hikes which may dampen investor interest in foreign investments such as equities and commodities. Further, a potential slowdown in growth in China can put pressure on commodity prices as well which may hurt commodity exporting countries in Latin America.

The good news for corporations with presence in the U.S. and Latin America is that such firms have access to deep capital markets in the U.S. to address these potential challenges. The course will explain corporate managers how best to look out for and address potential challenges so that they do not affect firm operations.            

Exercise: Use excel based tools within a case to discuss potential exchange rate risks and best practices to avoid disruption.

Faculty


Indraneel Chakraborty

Professor Indraneel Chakraborty is a faculty member in the finance department at Miami Business School. He has a Ph.D. in finance from Wharton with masters from Massachusetts Institute of Technology and bachelors from Indian Institute of Technology (President of India Gold Medalist). He has worked for Citadel Investments and Citigroup Global Markets Inc. for their fixed income divisions. He has won multiple awards for his research and holds six patents for his work on Bluetooth. He teaches classes on Alternative Investments and Financial Institutions at the University. He advises the city of Ft. Lauderdale on their pension plans and provides consulting to Wells Fargo Investment Banking division. His work has been presented at prestigious venues including University of Chicago, Stanford, Harvard, Cornell, IMF, the U.S. Federal Reserve, World Bank, European Central Bank, Bank of Chile, National Bureau of Economic Research, American Finance Association, among others. His work has been published in major journals including Journal of Financial Economics, Journal of Monetary Economics, Review of Financial Studies, Management Science, and the Economic Journal and has been featured in the Economist, Wall Street Journal, Reuters, etc.

 

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