What role does it play for global cash management

Assignment Help Risk Management
Reference no: EM13763973

Question :Managing Exchange Rate Risk 

Mahindra International (India) imported spares of an engine from a US manufacturer for $ 5,000 per annum at a price of $ 2.5 per piece. The average exchange rate during 2001-02 was Rs. 47.70/$. The Indian company imported the spares also from a British manufacturer. In fact, it had diversified its import in view of reducing the risk associated with the supply. The import from the USA was competitive in view of the fact the same spares imported from the UK was slightly costlier. The American spares cost Rs. 119.25 per piece, while the British spares cost Rs. 120.00 per piece. In 2002-03, US dollar appreciated to Rs. 48.40 with the result that the cost of American spares turned higher than the British spares. In the sequel of the appreciation of US dollar, the Indian importer cut its demand from 2,000 pieces to 500 pieces. The loss to the US exporter was colossal. But at the same time, the Indian Importer suffered a lot. It had to pay a higher price for the US spares in terms of rupee. And also, it had to divert its import from the USA to the UK insofar as the pound sterling did not appreciate during this period. All this happened in the wake of the exchange rate changes.

Questions:

1. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.

2. What strategy the Indian importer needs to follow to hedge the exchange rate risk?

Case let 2

ABN Amro Bank and Correspondent Banking in India

ABN AMRO bank has emerged as a major correspondent bank owing to a large network. In India, it operates in six major cities, viz. Baroda, Chennai, Kolkata, Mumbai, New Delhi and Pune. Being a correspondence bank, its product offerings are found primarily in the area of trade and clearing. It is doing well in these owing to strong tie-up with local Indian banks reaching 350 centres across the country. As a result, payments are effected speedily and effectively.

Cash Management

The customized products in the area of cash management include cheques payable at par at all its branches across the country, apart from traditional collection services, such as collection of outstation/upcountry cheques drawn on other banks. ABN AMRO is a member of all major clearing centers in the major financial centers. It has an electronic delivery system and structures multilateral netting of cash.

Trade Services

Under trade services, the Bank offers a comprehensive range of products, such as:

1. LC reimbursement

2. Indian rupee trade payments

3. Handling documentary bills for collection

4. Bills negotiation

5. Letter of credit advising

6. Letter of credit confirmation

7. Guarantees

Examination Paper of Finance Management

IIBM Institute of Business Management

Treasury Services

Treasury services at ABN AMRO Bank (India) are available round-the-clock. Rupee funding at its treasury desk is provided at competitive rates along with advice on market trends and rates. It provides also advisory services on the request of financial institutions and corporate in the area of regulatory, economic and financial matters including depository services.

Questions:

1. Describe the network of ABN AMRO Bank in India.

2. What role does it play for global cash management?

Verified Expert

Reference no: EM13763973

Questions Cloud

Who is impacted internally and externally : Outline the context of the problem or challenge, including the history and any policy decisions that have contributed to the situation. Why is it important that the problem be addressed, who is impacted internally and externally
Which countries still use the death penalty : Which countries still use the death penalty? How is it administered? Is it an effective deterrent? If so, in which countries and why
Explain the concept of triple bottom line principles : The incorporation of triple bottom line principles in work planning is a move many organisations have made. Explain the concept of triple bottom line principles.
Is this a good bill or a bad bill : Consider policy making as it relates to criminal offenses. What recommendations would you make? What are the reasons for your recommendations? Is this a good bill or a bad bill? Is this bill effective
What role does it play for global cash management : Describe the network of ABN AMRO Bank in India and what role does it play for global cash management?
Characteristics of a good officer : Write a 500-600 word paper, where you discuss what you think makes a "good" police officer. In your paper also include a discussion on: Characteristics of a "good" officer.
Explain the genetic or physiological evidence : Write a 1,400- to 2,100-word paper discussing the genetic or physiological evidence that supports the notion that biology played a key role in explaining the offender's criminality
Design and develop a database : Provide a logical and physical design of the database.
Write about the war in syria : Write about the war in Syria - you must write one page about impression and opinion about what happen in Syria.

Reviews

Write a Review

Risk Management Questions & Answers

  A project report on mutual funds

This project report speaks of the core and future aspects of Mutual Funds and the present challenges to cope with.

  Evalaute the theoretical option price

Evalaute the theoretical option price

  Risk and return

Investing in the stock market and Risk-free investment and inflation

  Evaluate the gross profit

Evaluate the gross profit

  Discuss concepts of risk and management

Risk lies at all levels of business activity. There are many different kinds of risks within an management as well as ways to manage risks.

  Determine the average risk premium

Here are stock market & Treasury bill percentage (%) returns between 2006 and 2010: Determine the average risk premium

  Hypothetical healthcare organization ratios

Discuss and explain why one should apply caution when using financial ratios for analyzing a healthcare management's current financial position and future viability.

  Discuss role of risk assessment

The financial information has been dominated currently by stories of financial institutions that have mis-measured risk as part of subprime mortgage crisis.

  Calculate maturity risk premium

The real risk-free rate is 3 percent, & inflation is expected to be 3 percent for the next two years. A 2-year Treasury security yields 6.3 percent.

  Selcting best option for portfolio

Suppose you are planning investing in two stocks to form a portfolio. Assume you do not like risk. Which one of given stock combinations will you select for your portfolio?

  Result of systematic or unsystematic risk

It has been a little over one year since the collapse of Lehman Brothers which was the first major event in the downturn of our stock market & economy.

  Determine risk management

Determine risk management? Discuss the importance of risk management in an organization? How does risk management mitigation create value for an organization?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd