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Currency hedging

AAnas12y ago
how currency hedging can reduce a firm's cost of capital??
John MoffatJohn MoffatTutor12y ago#1
If they have long term borrowing in a foreign currency then it will form part of their cost of capital. The interest payable will fluctuate depending on the exchange rate (and therefore effect the cost of capital) - hedging against that fluctuation would remove or reduce that risk.
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