Exposure Netting?

Question

I need a little help with my business homework. The question is: How would you accomplish exposure netting with currencies to two countries that tend to go up and down together in value?
I wasn't sure whether to post this in business and finance or economics, if I should post elsewhere, let me know.
So, it is my (limited) understanding that exposure netting can happen in two circumstances, currency groups or the pairing of a strong and a weak currency. The above, I believe, would be the situation of a currency group. Right? So, now...how do I elaborate? Or how would you?

Answer 1

How would you accomplish exposure netting with currencies to two countries that tend to go up and down together in value? Simple: the aggregate exposure to two currencies should be close to zero. Say, you have $100 million worth of long exposure (say, receivables) to currency A and $60 million worth of short exposure (say, payables) to currency B. In this situation, your aggregate exposure to two currencies is long $40 million. To offset this, you need a $40 million short exposure to one or both of those currencies. You can acquire this exposure by selling one or both of those currencies forward, by incurring additional payables in one or both of those currencies, or by taking out a loan in one or both of those currencies.

Answer 2

Exposure Netting

Answer 3

If this is an International Finance class, it sounds like exposure means "risk of a loss if currency moves in the wrong way"

And the way to hedge, or "net out" that exposure is to hold an opposite position in same currency or the one that moves along with it.

Answer 4

A defenite increase in morality. generaly. I dont think 5 year olds should see Dominatrixies on Day time tv. But America needs to loosen up. We are one of the only countys with this whole Bashful attitude towards the human body. TONS of other cultures dont have our "reserve" and produce very little nudity in there general programing. Simply becuase they have gotten over it. Do you know what happens when a writter first writes an F bomb? he starts over using it becuase "he he i am so Naughty" its the same thing with Porn, nudity, drugs, etc. Its overdone becuase its "Naughty". Its the human body, we all have one or the other. and if we learn to treat it right we would have less "Poser" homosexual backlash as well as Poser Submissives, Dominants, sadists, masochists, voyers, etc. Not to mention all the other problems we wouldnt have.