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A strategy to manage corporate foreign exchange exposures with mutual benefits to multinationals and Asia-Pacific countries

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posted on 06.12.2017, 00:00 by Muhandiramge Dayananda
Management of accounting exposure is often at the expense of increased transaction exposure or increased financing cost. Multinational firms want to mitigate both foreign exchange exposures and also reduce financing cost. This paper develops a model to demonstrate the potential for a comprehensive strategy which will mitigate accounting exposure without increasing transaction exposure or financing cost. The model has three main participants: multinational firms (as borrowers and business corporations), Asian-Pacific nations (as host countries), and their National Provident Funds (as lenders). The strategy involves direct local currency borrowing from National Provident Funds for multinational firms' investments in Asian-Pacific countries and the use of local currency sales revenue for servicing the debt. The strategy outlined satisfies the preferences of all the participants involved. The primary purpose of the paper is to provide a conceptual exposition of the potential, under certain conditions.

Funding

Category 1 - Australian Competitive Grants (this includes ARC, NHMRC)

History

Start Page

1

End Page

16

Number of Pages

16

ISSN

1440-4451

Publisher

Asia Pacific Research Group, Central Queensland University

Place of Publication

Rockhampton, Qld.

Open Access

No

External Author Affiliations

Asia Pacific Research Group;

Era Eligible

No

Usage metrics

CQUniversity

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