Bang for the Buck

The increase in vessel prices across all sectors has clearly raised the stakes for both shipowners and finance groups that are interested in asset plays. Shipping is an international business with various currencies changing hands. This adds another dimension of financial risk. Managing exchange rate risk is more of a concern today as the dollar continues to weaken against major currencies such as the yen, the euro, the won and the pound. And with most charter hire payments in US dollars, this can turn into a significant loss for some. The chart below shows the historical assessed prices of newbuilding VLCCs and the exchange rate between the US dollar and the South Korean won.