EXPOSURE IDENTIFICATION AS A STEP OF A CURRENCY RISK MANAGEMENT UNDER CURRENT ECONOMIC INSTABILITY

Abstract

In extreme global instability and external shocks, exchange rate volatility and currency risk exposures are among the primary issues for any international and domestic business entity. Moreover, currency risks nowadays have importance for Ukrainian enterprises for two reasons. Firstly, the war and foreseen post-war periods mean dramatic unpredictability and, therefore, the fragility of the economy overall and currency market as well because of various shocks at global and domestic markets, uncertain changes of macroeconomic fundamentals, mainly high inflation rates worldwide. Secondly, domestic companies need extra experience for effective managerial practices in a volatile environment, especially regarding currency risks. However, one can choose the most sufficient organisational tools only after correctly identifying exposures' roots, types, and characteristics, which is usually missing. Therefore, the paper aims to use a structural approach to ensure the correct identification of exposure to currency risk as a component of its assessment within goal-oriented management. Results include theoretical analysis of possible exposures to currency risk of the selected Ukrainian industries, namely the agricultural sector, food production, and defence. Practical implications aim at improving the effectiveness of currency risk management at domestic enterprises through correct analysis of the reasons and types of exposure.