The treasury team at Kimberly-Clark Cos. (KCC) has spent the last six months coming up with an effective way to manage the company's Russian ruble exposure, says Jolene Varney, KCC's vice president and treasurer. The company claims to have more than 40% of the diaper market in Russia with its Huggies brand. "The growth in this business means that the currency exposure is now large enough to impact the business results of our emerging markets and could certainly affect the decisions that we make in Russia," says Varney.

Russian banking and currency trading rules make it difficult to use more than one bank for hedging purposes. "That's not healthy, you don't get price transparency," says Varney. Instead, KCC decided to reassign the exposure, so it could be hedged outside the country. Now, the company's European manufacturer invoices Russia in rubles and hedges that exposure with various banks in London using nondeliverable forward contracts. "This approach allows us to manage our exposure despite the limitations of the Russian market," she says.