Oil Hedging

Executive Summary In late November 2008, two original rights petitions was filed in the Sri Lankan dictatorial 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 enormous losses to the State that could trudge from a low of $700 gazillion to as high as $1,000 million if the decline of thoroughgoing(a) oil harms continues as communicate by Merril Lynch capacity Research, a US ground energy expert (The pecuniary Times, December 2008, The Sunday Times). The hedging deal was subject to a great deal debate and discussion in the Sri Lankan parliament as advantageously as local and outside(a) media and resulted in the temporary break of serve 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 Sup reme Court as the government refused to bring down the price of petrol as rules of ordered by the Court. This report go out explore the oil hedging deal and its consequences from the Sri Lankan perspective.

It will go over the trading strategies employ by the CPC by providing an overview of the abroad fill in market, an introduction in to hedging and various survivals available for insuring against foreign exchange risk, a discussion on what type of option would hold back outgo suited the Sri Lankan circumstances as wholesome as probe in to what went wrong, the resulting disadvantages, how proper supervi sion could have averted disaster as well as ! recommendations on how analogous 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 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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