volkswagen hedging strategy

  • Volkswagen’s Hedging Strategy
  • Embraer and the Wild Ride of the Brazilian Real
  • Subaru’s Sales Boom Thanks to the Weaker Yen
  • What did you learn from these stories about hedging foreign exchange rate risk?
  • Why did Volkswagen suffer a 95% drop in its 4th quarter, 2003 profits?
  • Do you think the Volkswagen’s decision to hedge only 30% of its anticipated U.S. sales was a good? Why or why not?
  • Do you think the Volkswagen’s decision to revert back to hedging 70% of its foreign currency exposure was a good decision? Why or why not?

YOUR ANSWER

YOUR ANSWER

YOUR ANSWER

  • Is a decline in value of the real against the U.S. dollar good or bad for Embraer? Why?
  • How can Embraer reduce these risks?
  • Do you think Embraer’s decision to hedge against further appreciation of the real in the early 2000s was a good decision? Why or why not?
  • Since 2008 Embraer has significantly reduced its dollar hedging operations. Is this wise? Why or why not?

YOUR ANSWER

YOUR ANSWER

YOUR ANSWER

YOUR ANSWER

  • Why has Subaru concentrated its manufacturing in Japan?
  • What was the impact of the depreciation of the yen on Subaru’s profits since 2012?
  • Why is Subaru increasing its US production? Do you think it is a good decision? Why or why not
  • What did you learn from these stories about hedging foreign exchange rate risk?
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