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case#259693558-Finance.docx - Surname 1 Name Date Economics...

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Surname 1 Name Date Economics Exchange Rate Risk During the eight year presidency of Barack Obama, Federal Government entered numerous trade agreements to boost the US trade. However, backed by a consistent regime of low interest rates and a weak global economy, US dollar maintained a strong position, thus eventually turning out to be a hindrance for burgeoning US exports. However, considering the current outlook of the US economy when the Federal Reserve is poised to increase the interest rate, US companies need to be more competitive on a global scale, and for this reason, a weak dollar will be favorable for the US economy. Even President Trump has voiced support for the weak US dollar in order to aid American companies in selling their products abroad and trim trade deficit. (Pramuk, ‘‘ Trump suggests he wants a weak dollar to help US exporters’’) Methods to avoid exchange rate risk Hedging is the most profound method used by any multinational company in order to hedge the exchange rate risk. Some of the most common instruments available for hedging
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