Foreword

Sun Tzu’s quote every battle is won before it is ever fought is truly applicable in today’s corporate world. Effective risk management is the backbone of every firm’s financial success, and the best prepared are the ultimate winners.

In this era of globalization, corporates are no longer confined to their domestic territories for their business and financial operations. Activities such as cross-border mergers and acquisitions, offshore bond and equity issuances, and increasing trade linkages have led to a significant surge in foreign exchange turnover. This surge in volume coupled with the current sovereign, and financial crisis has manifested itself in the form of high volatility in currency markets hitherto unseen. The environment poses unique challenges and opportunities to corporate risk managers who are entrusted with the task of protecting the company’s bottom line.

This book is an excellent effort to provide an understanding and appreciation of this complex world of currency risk and available derivative products. The authors attempt to provide an in-depth perspective into the size, risk, instruments and strategies in currency derivatives, key financial market variables and the legal position. Each chapter provides a unique blend of practical and theoretical knowledge, which is a reflection of professional expertise of the authors. Anyone can say without fear of contradiction that this book is a comprehensive treatise of the title.

The authors are professionals who have been part of the financial industry for the last decade and have witnessed exponential growth of currency derivative market and its sophistication. They have had the benefit of working in large and highly reputed commercial and investment banks, and their experience is visible in the practical illustrations across the book.

The book will be a useful addition to any library and corporate treasury. I highly recommend this book to risk managers, fund managers, corporate executives and students, in particular, as the authors have done a commendable job to fill the void of a practical risk management handbook for professionals.

Sanjeev Bajaj Managing Director and Head of Credit Suisse AG, Mumbai Branch