Table of Contents
Introduction ........................................................ Page 2
Is there value in hedging? .................................. Page 4
How to hedge..................................................... Page 8
Bringing it all together ...................................... Page 16


The aim of this report is twofold. In the first section, we look at the empirical evidence on the
value of corporate hedging programs. We ask whether companies should be hedging their
FX exposure and investigate how these decisions impact shareholder value and corporate
strategy. In the second section, we introduce a new framework for analyzing the corporate
hedging decision. Most treasurers and CFOs are familiar with the distinction between
strategic and tactical hedging. The former refers to the principles and practice used to hedge
a firm’s long-term currency exposure. The latter involves hedging decisions that take
advantage of short-term ‘value’ opportunities in FX markets.