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  • March 2004 (Revised May 2005)
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Foreign Exchange Hedging Strategies at General Motors

By: Mihir A. Desai and Mark Veblen
  • Format:Print
  • | Pages:28
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Abstract

How should a multinational firm manage foreign exchange exposures? Examines transactional, translational, and competitive exposures. Describes General Motors' corporate hedging policies, its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a consistent approach to the foreign exchange risks that General Motors must manage, there are situations where the company must consider deviations from prescribed policies. Describes three such situations: large exposure to the Canadian dollar with adverse accounting consequences, GM's exposure to the Argentinean currency when devaluation is widely anticipated, and the impact of the depreciation of the Japanese yen to the dollar. To obtain executable spreadsheets (courseware), please contact our Customer Service Department at custserv@hbsp.harvard.edu

Keywords

Risk Management; Multinational Firms and Management; Currency Exchange Rate; Investment; Financial Markets; Manufacturing Industry; Auto Industry; Argentina; Japan; Canada; United States

Citation

Desai, Mihir A., and Mark Veblen. "Foreign Exchange Hedging Strategies at General Motors." Harvard Business School Case 204-024, March 2004. (Revised May 2005.)
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About The Author

Mihir A. Desai

Finance
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Related Work

    • March 2005 (Revised January 2006)
    • Faculty Research

    Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures

    By: Mihir A. Desai and Mark Veblen
    • March 2005 (Revised March 2006)
    • Faculty Research

    Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures

    By: Mihir A. Desai and Mark Veblen
Related Work
  • Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures By: Mihir A. Desai and Mark Veblen
  • Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures By: Mihir A. Desai and Mark Veblen
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