On May 25, 2023, the newly appointed chief finance officer (CFO) of the Philippine-based corporation Rhyte Telecom (Rhyte) was preparing for a presentation to discuss major financial risks with her board of directors. She was evaluating whether the company should hedge the foreign-exchange (FX) rate risk related to a US$500 million fixed-rate loan it had taken on May 24, 2019, to fund construction of its communication network. The loan was due on May 24, 2025, and the Philippine peso was widely expected to depreciate further relative to the US dollar by then. The CFO wanted to be sure that she had fully considered all possible options for mitigating the company’s FX risk. What was the best course of action to recommend to the board to bring these risks to an acceptable level within the organization’s existing risk-management framework?
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