Oil Hedging

Executive Summary In late November 2008, two natural rights petitions was filed in the Sri Lankan haughty Court against the oil colour hedge agreements with the Ceylon rock oil potentiometer (CPC) and several leading international and state banks. The subsequent prove in to the case revealed huge losses to the State that could trudge from a low of $700 meg to as high as $1,000 million if the decline of gross(a) oil hurts continues as communicate by Merril Lynch ability Research, a US ground energy expert (The fiscal Times, December 2008, The Sunday Times). The hedgerow deal was subject to oft debate and discussion in the Sri Lankan parliament as vigoroushead as local and outside(a) media and resulted in the temporary open frame 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 government refused to bring down the price of petrol as battle arrayed by the Court. This report result explore the oil hedging deal and its consequences from the Sri Lankan perspective.

It will criticism the trading strategies employ by the CPC by providing an overview of the unusual flip-flop market, an introduction in to hedging and various elections available for insuring against foreign exchange risk, a discussion on what type of option would puzzle outgo suited the Sri Lankan circumstances as well as probe in to what went wrong, the resulting disadvantages, how proper supervision could have averted disaster as well as re commendations on how identical financial cr! ises 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 abroad 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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