Oil Hedging

Executive Summary In latterly November 2008, two fundamental rights petitions was filed in the Sri Lankan Supreme courtyard a reach outst the crude color colour hedgerow agreements with the Ceylon oscillate oil potentiometer (CPC) and some(prenominal) leading multinational and express banks. The subsequent prove in to the grimace revealed massive losings to the State that could trudge from a low of $700 cardinal to as high as $1,000 million if the decline of crude oil prices continues as communicate by Merril Lynch Energy Research, a US ground muscle expert (The Financial Times, declination 2008, The Sunday Times). The hedging bang was subject to much reflect and discussion in the Sri Lankan fantan as well as local and outside(a) media and resulted in the momentary suspension of payments to the banks involved, the suspension of the CPC Chairman, and accusations against the rector of Petroleum for alleged fraud. The investigations to the case were halted by the Supreme Court as the government refused to shoot down the price of natural gas as ordered by the Court. This draw will look for the oil hedging chew and its consequences from the Sri Lankan perspective.

It will review the traffic strategies employ by the CPC by providing an overview of the foreign supplant market, an foot in to hedging and diverse options available for insuring against foreign exchange risk, a discussion on what type of option would down outgo suited the Sri Lankan lot as well as probe in to what went wrong, the resulting disadvantages, how appropriate supervision could have averted chance as well as recommendations on how similar pecuniary crises may be avoided in the future. The facts discussed and views expressed in the report be purely for academician purposes and do not signify whatsoever prejudicial or political views. 1.Understanding the Foreign commute Market In order to clear the hedging deals entered in to by the CPC, and the consequences thereto, it is important to first gain a broad overview of the...If you take care to get a undecomposed essay, order it on our website: Ordercustompaper.com

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