Boeing Frontiers
August 2003
Volume 02, Issue 04
Top Stories Inside Quick Takes Site Tools
Focus on Finance
Worldwide Vision

There's no denying Boeing's interest in expanding its global presence. In 2002, carriers based outside the United States accounted for 69 percent of the orders at Boeing Commercial Airplanes. And among the major defense wins in the past 18 months are the F-15K fighter aircraft to the Republic of Korea and the 737-based Airborne Early Warning and Control aircraft to Turkey.

That international focus hasn't been lost on the Boeing Treasury Department, whose services Boeing uses in some fashion in each international sales campaign. And as Boeing goes global, so does Treasury, in terms of its strategy, expertise, foreign outreach and tactical support.


Hedging helps mitigate foreign currency risks

As a company that does business internationally, Boeing interacts with customers and suppliers whose home currencies may not be U.S. dollars. To help protect against the risks from currency fluctuations, Boeing normally turns to currency hedging.

In general, a currency hedge preserves the exchange rate between two currencies at a known value. Hedging is implemented by entering into financial instruments such as forward contracts, which allows Boeing to lock into a known future exchange rate at a future date. Upon reaching this date, the currencies are exchanged at the locked-in rate.

Without hedging, the values of payments made in the future are subject to currency swings—and could end up being worth more (or less) than forecast.

Boeing will consider hedging only for currencies that are stable enough to have a hedging market.


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