In an uncertain world, derivatives are key to managing currency risk
Managing exchange-rate risk is a critical tool that is essential for any organisation, local or multinational, focused on stability or growth
The rand has a history of volatility — appreciating one day and weakening the next, mainly taking its direction from the performance of the global economy, specifically the relative performance of emerging markets, the SA economy, commodity prices and political developments.
As a free-floating currency the rand’s value in relation to other currencies is determined by demand and supply, strengthening when its demand increases and depreciating when its demand drops. These fluctuations, and sometimes relative stability in the value of the rand, may require companies, investors, traders, importers and exporters to use foreign exchange derivatives to hedge themselves against the volatility...
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