Oil Hedging

Executive Summary In late November 2008, two vestigial rights petitions was filed in the Sri Lankan imperative Court against the oil colour hedgerow agreements with the Ceylon rock oil potentiometer (CPC) and several leading multinational and state banks. The subsequent prove in to the case revealed massive losses to the State that could trudge from a low of $700 billion to as high as $1,000 million if the decline of in the buff oil outlays continues as communicate by Merril Lynch dexterity Research, a US ground energy expert (The monetary Times, December 2008, The Sunday Times). The hedge deal was subject to frequently debate and discussion in the Sri Lankan parliament as tumefy as local and outside(a) media and resulted in the temporary breach 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 gove rnment refused to bring down the price of petrol as hostelryed by the Court. This report willing explore the oil hedging deal and its consequences from the Sri Lankan perspective.

It will look into the trading strategies employ by the CPC by providing an overview of the inappropriate swop market, an introduction in to hedging and various fillings available for insuring against foreign exchange risk, a discussion on what type of option would subscribe to outgo suited the Sri Lankan circumstances as wellhead as probe in to what went wrong, the resulting disadvantages, how proper supervision could have averted disast er as well as recommendations on how exchan! geable financial crises may be avoided in the future. The facts discussed and views expressed in the report be purely for academic purposes and do not represent whatsoever prejudicial or political views. 1.Understanding the contradictory 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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