Managing Commodity Price Risk In Developing Countries
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Managing Commodity Price Risk In Developing Countries
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Author : Stijn Claessens
language : en
Publisher: World Bank Publications
Release Date : 1993
Managing Commodity Price Risk In Developing Countries written by Stijn Claessens and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Business & Economics categories.
Primary commodities represent more than one-half of the export earnings of many developing countries. The large fluctuations that can occur in the prices of such commodities are therefore a main economic difficulty for these countries. New financial techniques can lower the risk caused by these price changes over longer periods and allow financial obligations to be linked to commodity prices. But few developing countries have used these techniques. This book shows policymakers in developing countries how to use the full range of new and established financial techniques. Through case studies, it provides detailed information about the techniques, analyzes the institutional constraints on them, and illustrates the kinds of technical assistance needed to make good use of them. It also describes the instruments, the markets, and the current regulatory framework. For the past several years, the World Bank has assisted developing countries in managing commodity price risk. The book draws extensively on the lessons learned from this assistance to demonstrate that developing countries can benefit significantly from using financial techniques to manage their risk.
Risk Management In Developing Countries
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Author : Stijn Claessens
language : en
Publisher: World Bank Publications
Release Date : 1993-01-01
Risk Management In Developing Countries written by Stijn Claessens and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993-01-01 with Business & Economics categories.
Modern risk management techniques can help countries avoid the financial risks that affect future cash flows and long-term plans. They provide a hedge against profit fluctuations caused by changes in interest rates, exchange rates, and commodity prices. This easy-to-use guide examines the risk management tools developing countries have used successfully, including futures, options, forward contracts, commodity swaps, commodity bonds, commodity linked loans, currency rate swaps, and interest rate swaps. An action plan explains how to use the techniques wisely to avoid costly mistakes. It also describes the economic management and financial regulations countries must have in place before adopting any risk management techniques.
Dealing With Commodity Price Uncertainty
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Author : Panos Varangis
language : en
Publisher: World Bank Publications
Release Date : 1996
Dealing With Commodity Price Uncertainty written by Panos Varangis and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with Commodity exchanges categories.
Dealing With Commodity Price Uncertainty
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Author : Panayotis N. Varangis
language : en
Publisher:
Release Date : 1999
Dealing With Commodity Price Uncertainty written by Panayotis N. Varangis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
October 1996 Market liberalization has increased the appeal of commodity derivative instruments (such as futures, options, swaps, and commodity-linked notes) as a means of managing price uncertainty. In many emerging countries both government and the private sector are increasingly using these instruments. Liberalization in commodity markets has brought profound changes in the way price risks are allocated and managed in commodity subsectors. Price risks are increasingly allocated to private traders and farmers rather than absorbed by the government. The success of market reform depends on the ability of the emerging private sector to make full use of the available range of modern commodity marketing, price risk management (such as futures, options, swaps, commodity bonds, and so on), and financing instruments. Because farmers do not generally have direct access to these instruments, intermediaries must be developed. Larger private traders and banks are in the best position to become these intermediaries. Preconditions needed for accessing modern commodity marketing, price risk management, and financing instruments are: * Creating an appropriate legal, regulatory, and institutional framework. * Reducing government intervention that crowds out private sector involvement. * Providing training and raising awareness. * Improving creditworthiness and reducing performance risk. The use of commodity derivative instruments to hedge commodity price risk is not new among developing countries. The private sector in many Asian and Latin American countries, for example, have been using commodity futures and options for some time. More recently, commodity derivative instruments are being used increasingly in several African countries and many economies in transition. And several developing and transition economies have sought to establish commodity derivative exchanges. This paper - a product of the Commodity Policy and Analysis Unit, International Economics Department - is part of a larger effort in the department to investigate alternative price risk management and finance systems under market liberalization.
Commodity Risk Management And Finance
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Author : Theophilos Priovolos
language : en
Publisher: Oxford University Press, USA
Release Date : 1991
Commodity Risk Management And Finance written by Theophilos Priovolos and has been published by Oxford University Press, USA this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with Business & Economics categories.
Commodity-linked finance has expanded rapidly in the 1980s, but it has mainly been confined to entities in industrial countries. Creditworthiness questions, reinforced by debt overhang, handicap the developing countries in their access to this type of financing. To achieve better risk management in the commodity-dependent developing countries, the authors argue that commodity-linked financial measures have important advantages in the external financing of developing countries as compared to the traditional alternatives of foreign-currency-denominated, general obligation borrowing or direct foreign investment. The authors argue that commodity-linked financing allows developing countries that are overexposed to particular risks, relative to those in the world economy, to shift these risks to world capital markets on an ex ante basis. The study concludes by offering a number of strategic solutions involving the World Bank as an integral participant in both monitoring debt reduction and enacting a technical advice program to assist developing countries manage their financial risk.
Managing Global Growth Risks And Commodity Price Shocks
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Author : Ms.Stefania Fabrizio
language : en
Publisher: International Monetary Fund
Release Date : 2012-07-10
Managing Global Growth Risks And Commodity Price Shocks written by Ms.Stefania Fabrizio and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-07-10 with Business & Economics categories.
As part of its work to help low-income countries manage volatility, the IMF has developed an analytical framework for assessing vulnerabilities and emerging risks that arise from changes in the external environment. This paper draws on the results of the first vulnerability exercise for low-income countries conducted by the IMF staff using this new framework. It focuses on the risks of a downturn in global growth and of further global commodity price shocks and discusses related policy challenges. Chapters review recent macroeconomic developments, including the spike in global commodity prices in early 2012; assess current risks and vulnerabilities, including how a sharp downturn in global growth and further commodity price shocks would affect low-income countries; and discuss policy challenges in the face of these risks and vulnerabilities.
Dealing With Commodity Price Uncertainty
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Author : Panos Varangis
language : en
Publisher:
Release Date : 2016
Dealing With Commodity Price Uncertainty written by Panos Varangis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Market liberalization has increased the appeal of commodity derivative instruments (such as futures, options, swaps, and commodity-linked notes) as a means of managing price uncertainty. In many emerging countries both government and the private sector are increasingly using these instruments. Liberalization in commodity markets has brought profound changes in the way price risks are allocated and managed in commodity subsectors. Price risks are increasingly allocated to private traders and farmers rather than absorbed by the government.The success of market reform depends on the ability of the emerging private sector to make full use of the available range of modern commodity marketing, price risk management (such as futures, options, swaps, commodity bonds, and so on), and financing instruments. Because farmers do not generally have direct access to these instruments, intermediaries must be developed. Larger private traders and banks are in the best position to become these intermediaries.Preconditions needed for accessing modern commodity marketing, price risk management, and financing instruments are:Creating an appropriate legal, regulatory, and institutional framework.Reducing government intervention that crowds out private sector involvement.Providing training and raising awareness.Improving creditworthiness and reducing performance risk.The use of commodity derivative instruments to hedge commodity price risk is not new among developing countries. The private sector in many Asian and Latin American countries, for example, have been using commodity futures and options for some time. More recently, commodity derivative instruments are being used increasingly in several African countries and many economies in transition. And several developing and transition economies have sought to establish commodity derivative exchanges.This paper - a product of the Commodity Policy and Analysis Unit, International Economics Department - is part of a larger effort in the department to investigate alternative price risk management and finance systems under market liberalization.
Managing Global Growth Risks And Commodity Price Shocks Vulnerabilities And Policy Challenges For Low Income Countries
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Author : International Monetary Fund. Strategy, Policy, & Review Department
language : en
Publisher: International Monetary Fund
Release Date : 2011-09-21
Managing Global Growth Risks And Commodity Price Shocks Vulnerabilities And Policy Challenges For Low Income Countries written by International Monetary Fund. Strategy, Policy, & Review Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-09-21 with Business & Economics categories.
As part of its work to help low-income countries (LICs) manage volatility, the IMF has recently developed an analytical framework to assess vulnerabilities and emerging risks that arise from changes in the external environment (see IMF, 2011a). This report draws on the results of the first Vulnerability Exercise for LICs (VE-LIC) conducted by IMF staff using this new framework. The report focuses on the risks of a downturn in global growth and of further global commodity price shocks, and discusses related policy challenges. The report is organized as follows: Chapter I reviews recent macroeconomic developments, including the spike in global commodity prices earlier this year. Chapter II assesses current risks and vulnerabilities, including how a sharp downturn in global growth and further commodity price shocks would affect LICs. Chapter III discusses policy challenges in the face of these risks and vulnerabilities.
Managing Financial Risks In Indebted Developing Countries
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 1989-06-16
Managing Financial Risks In Indebted Developing Countries written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1989-06-16 with Business & Economics categories.
This paper examines the types of market-related hedging instruments that could potentially be useful to indebted developing countries as they seek to manage the financial risks created by variability of the prices of external assets and commodities. The paper reviews the variability in interest rates, exchange rates, and prices of primary commodities and then analyzes the effects of this variability on the domestic and external performance of indebted developing countries. Market-related hedging instruments that are accessible to indebted developing countries are also examined.
Financial Instruments To Hedge Commodity Price Risk For Developing Countries
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Author : Salih N. Neftci
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2008-01-01
Financial Instruments To Hedge Commodity Price Risk For Developing Countries written by Salih N. Neftci and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-01-01 with categories.
Many developing economies are heavily exposed to commodity markets, leaving them vulnerable to the vagaries of international commodity prices. This paper examines the use of commodity options-including plain vanilla, risk reversal, and barrier options-to hedge such risk. It then proposes the use of a new structured product-a sovereign Eurobond with an embedded option on a specific commodity price. By extracting commodity price risk out of the bond, such an instrument insulates the bond default risk from commodity price movements, allowing it to be marketed at a lower credit spread. The product is also designed to help developing countries establish a credit derivatives market, which would in turn enhance the marketability and liquidity of sovereign bonds.