Mr. Talley also suggested that clients use foreign currency contracts to hedge against the dollar's volatility.
Late in 1994, Mr. de Kwiatkowski purchased foreign currency contracts worth approximately $6.5 billion, and lost an estimated $215 million a few months later.
"We also are seeing strong growth in interest and demand from high-net-worth investors outside of Asia who are looking for opportunities to gain direct exposure to the renminbi through either deposits, foreign currency contracts or bonds, whereas in the past they have gained exposure indirectly through fund-type products".
Especially in a country where the currency is volatile, you may want to buy a foreign currency contract that locks in your exchange rate, for your fixed local expenses, she said.
NEW YORK TIMES Regulators Sue Foreign-Currency Traders | The Commodity Futures Trading Commission is suing 11 firms it claims sold foreign-currency contracts without registering with the agency.
Although Greek hoteliers worked in foreign-currency contracts before the euro was introduced, if they were forced to contract in drachmas after an exit, then their revenues would fall, too.Second, the prospect of lower costs is likely to be illusory.
The value of foreign-currency contracts intended to insulate it from sharp swings in the dollar versus the euro also deteriorated during the quarter, eating into earnings, EADS said.
In May a jury found Bear Stearns negligent for allowing a client, Henryk de Kwiatkowski, to invest millions in foreign currency future contracts without properly advising him of the high risk involved with the market, where he lost about $300 million.
Park and Irwin (2007, p. 67) summarized the evidence for the profitability of technical analysis in futures contracts, foreign currency markets, and in the capital markets.
However, he said, the Indian tech industry typically hedges 70 percent of the U.S. dollar contracts against foreign currency fluctuations, so the sinking rupee was not likely to provide a huge bump in revenue.
There are three principal techniques designed to meet the requirements of international trade operators in covering exchange risks: the fixed forward contract, the option forward contract, and the foreign currency option.
