FX Markets Research Report
Master of Science in Supply Chain Management / Postgraduate Diploma in Science in Supply Chain Management
Global Finance for Supply Chain Management
CA2: ASSIGNMENT BRIEF
You have recently been appointed as a senior risk specialist at a large exporter of computer components with significant contracts in the EU, the UK and US markets.
The company’s CFO has asked you to write a detailed report summarizing the current behaviour of FX markets where the company is exposed. The report should consider the effects of
- The recent impact of, and outlook for, inflationary pressures,
- The ongoing war in Ukraine and the Middle East,
- ongoing political uncertainties in the UK, US and Europe,
- the continuing tariff and trade situation (particularly US/China),
- the impact of continued USD EUR and GBP volatility
- The instability in the banking sector
or any other issues, in your opinion, currently affecting the volatility of the FX markets
She is specifically interested in developing a strategy to mitigate the company’s risk from its increasing FX exposure and wants you to propose how the greater utilization of derivatives could reduce the firm’s risk profile both in the short and medium term.
You have been specifically asked to outline the following strategies:
- Hedging strategies that could be deployed;
- Potential on-balance sheet hedging strategies;
- Strategies for avoiding event risks.
On completion of the assessment, on the basis that the company has significant hedging concerns for the next 2-3 years, you have been asked for a set of recommendations as to how the company may improve its overall hedging strategy.
Students are encouraged to independently research, present their own findings, and support their work with figures, graphs, excel files and other materials wherever applicable.
Groups must submit:
- The final group report as specified above.
- A SINGLE word document incorporating
- Minuted notes of group meetings. And
- A brief note from each individual group member specifying the precise nature of their contribution to the final product, and estimating the time involved. This will represent the agreed group position. Individual submissions in this regard will not be accepted and will be penalised.
The right is reserved to vary the grade awarded to individual group members should circumstances warrant.
GRADING GUIDELINES
CA2 is worth 50% of the total grade for the module
MARKS FOR THIS CA ARE AWARDED OUT OF 100, OF WHICH
Behaviour of FX markets – 30 marks:
5 marks for each of the 6 criteria as detailed in the assignment brief. Each element to include an analysis of the factor and how it would affect FX rates (i.e. positively or negatively).
Strategies – 30 marks
Detail and analysis of the strategies to be considered – Hedging, On-balance sheet, Event Risk – 10 marks for each.
RECOMMENDATIONS for an overall hedging strategy to be implemented by the company (at least 5), stating purpose and expected benefit for each recommendation– 6 marks per recommendation – 30 MARKS in total for this element:
STRUCTURE, LAYOUT, ACCURACY OF REPORT, REFERENCES & SUPPORTING MATERIAL – 10 MARKS .