CONTINGENCY PLAN FOR MANAGING FOREIGN EXCHANGE RISK

Contingency Plan for Managing Foreign Exchange Risk

Contingency Plan for Managing Foreign Exchange Risk

Risks

Currency risks relating to adverse fluctuations in rates that result in loss of purchasing power and reduced profits. In relation to Brazil, the U.S. is a mature economy, which is associated with stability. In the global financial crisis, the dollar strengthened and foreign investors covet U.S. Treasuries risk-free. Meanwhile, the Brazilian real is associated with an emerging market that offers the greatest potential for growth along with higher risk.

In exchange for premium costs, investors buy options that have the rights to accept or ...