Currency Exchange Rates and Global Stock Markets

currency: A result of the stock market movements was also some dramatic changes in currency exchange rates with significant movements in all the world major currencies, according to The Moscow Times. These events reinforce the need to carefully consider the currency that is transacted in. Richard Cowie Partner Dentons The world news has been dominated in the past week by stories on "Black Monday", the "Global stock markets sell-off" and the "China stock crash". This led to hundreds of billions being wiped off the world financial markets at the start of last week, although the markets seemed to rally towards the end of last week. Whether you are doing the latest multi-million dollar M&A transaction, refinancing debt, renting an apartment or buying a car, transactions are often priced by reference to USD or Euro, particularly when there is a foreign element. Some of the key factors that need to be considered include: Currency Mismatch Is there a mismatch between the currency that the payment obligation is being incurred in and the currency that the company or person earns money in . There are a number of strategies to deal with this, including: Currency hedging: currency hedging is, in effect, a way of insuring against a currency movement in a certain period. The currency that is selected can result in significant gains or losses depending upon the selected currency. (news.financializer.com). As reported in the news.