Case: Rethinking Saizeriya's Currency Hedging Strategy

Task

1. Discuss the following Cornerstone of Saizeriya's re-thinking about Currency Hedging in 2020;
   1. Rationale/Reason/Motivation
   2. Suggested Nature of Hedge if Forwards are deployed for the Hedging (Long/Short and the Underlying Asset)
   3. Potential Profits & Losses based on Reasonably assumed parameters of exchange rate (Based on historical data) assuming hedge is being conducted through Forwards.
2. Based on your analysis in Part 1, is the proposed strategy truly a Hedging Strategy?
3. How do you differentiate your proposed strategy with the one deployed by Saizeriya in 2008? Understand and Explain the dynamics of the Currency Swap Agreement and try to graphically present its payoffs for Saizeriya.
4. What is your take on Foreign Exchange Hedging by the Corporations in the light of "Hedging Irrelevance Theory".
5. What would you like to suggest to the company going forward to deal with this current situation during Corona Pandemic?