What are the most important strategies for managing foreign exchange risks?

Absolutely. This is fundamental to identify the exposure. There are many things to look at it: depreciation of the currency, inflation rate, interest rate, etc. It very much depends on where you earn FX and which country you send remittances back. Ideally, if your home country (origin) is subject significant depreciation in local currency, then one shouldn't send more than what is needed for operating or essential expenses. One should save in the FX in host country and invest such savings in multiple options. If the parity is almost negligible and ER is stable, then go for investment options which provide more sustainable returns which are competitive.

One thing I would like to add to managing foreign exchange risk is to stay long on the stronger currency. As a currency trader for over 10years, I have learnt a lot about trending and timing. I have bills to pay back home from time to time and I also know the GBP and USD are strengthening against the naira. I therefore stay long on my earning currency as a strategy and convert only what is necessary to pay bills back home. Another strategy is the carry trade where you can borrow from a relatively lower interest rate environment and invest in a higher yield. This carries exchange rate risk which can be mitigated via FX swap. Once your swap/hedge cost does not wipe away your gains in interest rate difference, you are good.

? Understand and Identify Exposures ? Hedge Currency Risk ? Diversify Revenue Streams ? Monitor and Stay Informed ? Establish a Currency Risk Management Policy ? Work with Knowledgeable Partners

One observation: Comments below reflect how difficult it seems to be - even for financial professionals - to keep thoughts around FX structured and clearly separated. This section is about "identifying your exposure". This step has zero (0!) to do with ANYTHING that follows next (i.e. measuring risk and hedging) - "Stay long in the "stronger" currency". - "Depreciation of the currency, inflation rate, interest rate etc." ... Gents, I am sorry, but all of this advice is unrelated to exposure measurement, i.e. identifying which financial positions and planned cashflows are subject to currency fluctuations because they are denominated in a currency different from the functional currency of the respective entity. Treasury 101.

Foreign exchange risk is one of the biggest risks that businesses face when operating internationally. It can have a significant impact on profits, margins, and overall financial performance. They include: Hedging: involves taking a position in the foreign exchange market that offsets the risk of adverse currency movements. Natural hedging: using the company's own business operations to offset foreign exchange risk e.g by importing goods from the same country where a company imports. Exposure management: reducing the company's exposure to foreign exchange risk by diversifying the company's business operations, using local currencies whenever possible, and minimizing the company's reliance on foreign exchange financing.

NO! You cannot time the market. This is speculating. You are leaving your exposure open so you are exposed, simple as that. So don’t do it

This is a very good strategy. Its easier to monitor fundamentals. However, if you have training in technical analysis (charts), this is way more efficient particularly with regard to timing your transactions

Never leave the exchange rate to chance. A strategy that can help you is to stay short or long depending on the volatility of the dollar and maintain your position correctly.

... and keep in mind that brokers and bankers may have their own interests in mind before yours as some famous "hedging debacles" in the past have shown. So above all: don't sign anything you don't understand and most likely - as a Corporate Treasurer - FX Spots, Forwards, NDFs and (depending on the business model) plain-vanilla options is all you will ever really need. ;)