Reasons for not Hedging
There are
mainly two reasons for hedging
1.
Technical Expertise Required
Hedging
is a very technical and complex issue and therefore requires high professional
skills to manage the hedging issues within organization. It is may not be
feasible for organization to hire an expensive professional for this purpose.
2.
Transactions are not material
Hedging may be avoided for low volume
of transactions or the amount involved is not material for the organization as
compare to overall operations of organization.
3.
No profit no loss in long run
Organization believes that some time
they loss and some time business win from the exchange rate fluctuation and
therefore in long run there is no loss or profit.
