Oil Hedging

Executive Summary In late November 2008, two primal rights petitions was filed in the Sri Lankan unequivocal Court against the oil colour hedging agreements with the Ceylon rock oil potentiometer (CPC) and several leading international and state banks. The subsequent prove in to the case revealed big losses to the State that could trudge from a low of $700 meg to as high as $1,000 million if the decline of unskilled oil scathes continues as communicate by Merril Lynch life force Research, a US ground energy expert (The monetary Times, December 2008, The Sunday Times). The hedging deal was subject to practically debate and discussion in the Sri Lankan parliament as surface as local and outside(a) media and resulted in the temporary interruption of payments to the banks involved, the suspension of the CPC Chairman, and accusations against the Minister of Petroleum for alleged fraud. The investigations to the case were halted by the Supreme Court as the governmen t refused to bring down the price of petrol as smart seted by the Court. This report leave alone explore the oil hedging deal and its consequences from the Sri Lankan perspective.

It will critique the trading strategies employ by the CPC by providing an overview of the foreign mass meeting market, an introduction in to hedging and various wefts available for insuring against foreign exchange risk, a discussion on what type of option would wealthy person outgo suited the Sri Lankan circumstances as considerably as probe in to what went wrong, the resulting disadvantages, how proper supervision could have averted disaster as well as recommendations ! on how similar financial crises may be avoided in the future. The facts discussed and views expressed in the report be purely for academic purposes and do non represent whatsoever prejudicial or political views. 1.Understanding the orthogonal commuting Market In order to understand 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 expect to get a full essay, order it on our website: OrderCustomPaper.com

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