Risk Management in Developing Countries, Volumes 23-235
Modern risk management techniques can help countries avoid the financial risks that affect future cash flows and long-term plans. They provide a hedge against profit fluctuations caused by changes in interest rates, exchange rates, and commodity prices. This easy-to-use guide examines the risk management tools developing countries have used successfully, including futures, options, forward contracts, commodity swaps, commodity bonds, commodity linked loans, currency rate swaps, and interest rate swaps. An action plan explains how to use the techniques wisely to avoid costly mistakes. It also describes the economic management and financial regulations countries must have in place before adopting any risk management techniques.
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Africa assets and liabilities basis risk bond borrower buy or sell buyer cash flows Central Bank commercial bank commodity price risks commodity swap copper price copper swap cost country's creditworthiness currency and interest currency swap debt service developing countries DM 2 million domestic enterprise Eurodollar example exchange rates export earnings export prices export revenues external shocks financial instruments fixed price forward contracts Forward markets funds future market futures contracts gold hedging import Indonesia interest-rate swaps international prices LIBOR liquid loan long-term maturity Mexico mil $17 mil months NOMINAL INTEREST RATES oil price P.O. Box Paribas parties percent over LIBOR policy makers price changes price movements private sector producer put option real interest rate repayment risk exposure risk management risk management instruments short-term six-month Sonatrach strategy structure swap contract Swiss franc syndicate traded transactions troy ounces U.S. dollars U.S. Treasury US$1 million volatility World Bank
Page 48 - firms, such as the Industrial Development Bank of India, the ExportImport Bank of India, the Industrial Credit and Investment Corporation of India, and Air India, have used swap transactions
Page 27 - A forward contract is an agreement to buy (or sell) an asset at a
Page 54 - This scheme, together with MdC's history of excellent operating performance and Mexico's favorable economic reform policy, made possible the first voluntary lending to Mexico's private sector in hard currency since 1982.
Page 67 - american option An OPTION contract that may be exercised at any time prior to expiration. This differs from a EUROPEAN OPTION which may only be exercised on the expiration date.
Page 52 - Ten semiannual payments of the US dollar equivalent of 130,000 pounds of copper (multiplied by the reference price) The average daily closing cash copper price in the London Metal Exchange over the six months preceding each repayment date The loan can be repaid regardless of the copper price over the next five years
Page 67 - balance of payments Net value of all economic transactions, including trade in goods and services, transfer payments, loans, and
Page 69 - during the trading life of a futures contract to guarantee fulfillment of
Page 15 - It is extremely important for us that investors know that, no matter what happens to the price of oil, the economic program is on for 1991. Regardless of what happens, we have got US$17 a barrel ... and there's enough in the kitty.
Page 31 - Forward markets for commodities are less liquid than currency and interest rate markets. The London Metal Exchange is one of the largest forward markets for commodities: aluminum, copper, lead, nickel, and zinc are traded on three-month maturities. Transactions are also