Foreign Exchange Risk Management Research Articles

The Measures to Solve the US Subprime Crisis and Inspirations

This paper focuses on the subprime mortgage crisis in the United States at the beginning of the 21st century, and analyzes how this crisis was formed through chain transmission from the perspective of financial bonds in the real estate industry. The paper focuses on the Federal Reserve's policy adjustments and the collapse of the banking system, in order to elucidate the severe impacts of the subprime crisis on the US financial system. Through data collection and attribution analysis, it intends to provide methods for preventing similar crises from happening again, including diversifying policy tools, strengthening supervision, foreign exchange risk management, etc., and provide certain suggestions for the stable operation and resilience of the national financial system.

Risk Assessment of the Banking Industry under the COVID-19 Crisis

This paper shows that increased bank asset liquidity does not necessarily reduce risk-taking. The help provided by the government in the epidemic crisis has also been provided after the damage occurred. On the other hand, the merger of banks is not a good thing for low-risk banks. Regulators should conduct frequent financial reports on banks to ensure that the risk of sudden default due to weak supervision is reduced. Foreign exchange risk management is especially important for banks involved in cross-border transactions and foreign exchange business. Reasonable control of the market exchange rate prohibits the impact of the foreign exchange black market on the market. The COVID-19 epidemic has led to fluctuations and instability in global exchange rates and the banking industry. For the foreign exchange transaction risks caused by exchange rate fluctuations, banks usually need various foreign exchange derivatives instruments to ensure that foreign exchange risks are effectively managed.

Impact of Governance on the Failure of Moroccan SME Exporters

This study aims to assess how governance can affect the ability of exporting SMEs in Morocco to cope with exchange rate fluctuations, by identifying the resulting failure factors and proposing effective governance strategies to address them. The hypothesis formulated is that good governance within exporting SMEs can improve their ability to cope with exchange rate fluctuations by reducing the default factors associated with these variations and by promoting the implementation of effective exchange rate risk management strategies. The epistemological framework of this study is based on a quantitative approach, using a linear regression model to analyze data collected from Moroccan SME exporters. The results of the analysis enable the identification of good governance practices, such as management transparency, quality of financial information and stakeholder participation. Currency risk management measures, such as hedging, are also recommended to help exporting SMEs cope with exchange rate fluctuations. Finally, support measures for exporting SMEs, such as training in financial management and foreign exchange risk management, are proposed to strengthen their ability to cope with exchange rate fluctuations

Management of Foreign Exchange Risk for Build–Own–Operate–Transfer Hydropower Projects in Nepal: A Good-for-All Approach

Management of Foreign Exchange Risk for Build–Own–Operate–Transfer Hydropower Projects in Nepal: A Good-for-All Approach

The Impact of Exchange Rate Fluctuation on Toyota Financial Performance and Its Hedging Strategy

In today's globalised economy, the majority of businesses operate in many nations, utilising foreign exchange for imports and exports to expose them to foreign exchange risk. Every business is more or less affected by foreign exchange risk, which is made up of transaction risk, translation risk, and economic risk. By analyzing Toyota's financial reports and comparing financial data of multiple fiscal years (2018 is the base year), including Toyota's derivatives trading volume, foreign exchange income, exchange rate fluctuations of Japanese yen relative to other major currencies, and the average transaction price of currency trading, this study studied the role of financial derivatives in Toyota's foreign exchange risk management. The research results show that Toyota's derivatives transactions in 2018, including forward foreign exchange future contracts and foreign exchange options, strongly offset the foreign exchange risk caused by the appreciation of the yen against the US dollar and the euro. In addition to the derivatives transactions, Toyota also used other risk management policies to reduce its foreign exchange risk. Although the use of financial derivatives can hedge risks, but it will also bring losses to the enterprise. In today's volatile global business environment, each enterprise must choose the appropriate risk management tools for it.

УПРАВЛІННЯ ВАЛЮТНИМИ РИЗИКАМИ БАНКІВСЬКИХ УСТАНОВ В СУЧАСНИХ УМОВАХ

The scientific work examines the processes of currency risk management of banking institutions in modern conditions. The article analyzes the impact of exchange rate fluctuations and the process of globalization on the financial stability and profitability of banks. It also examines the role of regulators, particularly national banks, in setting standards and requirements for currency risk management. The main purpose of the scientific article is to determine the strategies and methods that banking institutions can use to reduce currency risks and ensure financial stability in conditions of constant currency fluctuations. The study includes an analysis of innovative approaches and technologies that can help banks optimize their foreign exchange risk management. It has been proven that banks, carrying out international operations and operating in conditions of global economic instability, face significant currency risks. Scientific approaches to the definition of the term «currency risks» are highlighted. The author’s vision of the concept of «currency risk» is presented. In the scientific work, the classification of currency risk was carried out. It is noted that the main types of currency risk are direct, transactional and translational risks. The dynamics of the official exchange rate of the hryvnia in relation to foreign currencies for 2018–2023 have been analyzed. It has been proven that high levels of currency fluctuations can lead to large losses that are difficult to prevent or repay, jeopardizing the financial stability of banks and their ability to provide services to customers on stable terms. The list of systemically important banks of Ukraine is highlighted. The regulatory requirements, which are regulated by the National Bank of Ukraine and affect the activities of systemically important banks of Ukraine, have been studied. Factors that have a positive and negative influence on the process of currency risk management in banking institutions are considered. The main strategies of currency risk management in banking institutions are defined and characterized.

Implementation of currency interventions of the Central Bank of Armenia with financial derivatives

Purpose: The main goal of the paper is to develop financial derivatives of the Republic of Armenia (RA) as hedging tools for foreign exchange risk management for financial organizations and other entities. The secondary goal is to substantiate the efficiency and expediency of the use of financial derivatives as alternative tools for the implementation of foreign exchange interventions of the Central Bank of Armenia (CBA). Methodology: In order to evaluate the currency interventions carried out by the Central Bank of Armenia (CBA), the interventions and their impact were studied by applying causal-comparative analysis and synthesis methods based on the CBA and International Monetary Fund (IMF) data. The most efficient intervention tools were revealed as a result of such analysis. The forward prices were calculated based on the swap intervention data and using the principle of impossibility of arbitration. Results: The present study substantiated that the application of a forward contract for difference can ensure the same goals like those pursued by foreign exchange interventions with no impact on foreign reserves and no need for sterilization. Conclusion: It was proposed to divide the swap agreements used by the CBA into spot and forward, which will ensure the realization of the same goals along with engaging a large number of non-financial companies. At the same time, the application of a forward contract for difference during the implementation of foreign exchange interventions will lead to the development of the financial derivatives market and ensure the matching of foreign exchange cash flows received by businesses in different periods.

Improvement of Foreign Exchange Risk Management in Tourism and Hospitality Industry Enterprises

Improvement of Foreign Exchange Risk Management in Tourism and Hospitality Industry Enterprises

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Abstract. Introduction. The activity of banks in foreign exchange markets, which consists in the management of assets and liabilities in foreign currency and in bank metals, is associated with currency risks (one of the elements of market risk), which arise in connection with the use of various currencies and bank metals during conducting banking operations. Risk means the uncertainty associated with the occurrence of any event or its consequences. The continuous functioning of the foreign exchange market is its main feature, which leads to the fact that a bank that has an open position in foreign currency is exposed to currency risk even when it is not working. Under such circumstances, the analysis and assessment of currency risks in the bank becomes very relevant, the results of which will ensure the creation of conditions for its stable and efficient functioning. Purpose. The purpose of the work is the analysis and assessment of the bank's currency risk. Results. The article examines the nature and types of currency risk, analyzes the structure and dynamics of currency assets and liabilities on various grounds. Also, the work identifies the risk of currency operations of JSC "Ukrsibbank" and draws relevant conclusions. Conclusions. The work draws the following conclusions: in the composition of foreign currency assets, a significant share of loans to legal entities is almost 33% and other currency assets - almost 62%, the lowest share is loans to individuals and funds in other banks; the dynamics of all currency assets is not uniform, there is a clear growth trend only in other currency assets, and only through them the bank increases currency assets in general; the largest share in the bank's monetary assets and liabilities is made up of US dollars and Euros; in terms of the number of currencies that the bank uses in foreign exchange operations, the currency portfolio is not diversified, which causes additional risk. Therefore, the bank's foreign exchange risk management policy can be assessed as positive, since banks, in contrast to risks, create reserves for assets from conversion into the reporting currency, in recent years have followed the norms of the foreign exchange position and used favorable trends in exchange rate changes in the formation of foreign currency assets and liabilities.

Determinants of hedging strategy in foreign exchange risk management by exporting small and medium-sized enterprises: The mediating role of resources

Foreign exchange risk management is well researched in the context of multinational enterprises, but how small and medium sized exporting firms manage their forex risk is still largely unexplored, especially through an international business lens. This study investigates how New Zealand and Australian exporting small and medium-sized enterprises (SMEs) manage foreign exchange (forex) risk, and the impact of increasing internationalisation on this. The study draws on two theoretical perspectives to assist the investigation: the resource-based view and internationalisation theory. The surveys were distributed to New Zealand and Australian exporting firms across a full range of industry sectors represented in the business database provided by Kompass. Statistical analyses, including exploratory factor analysis, and confirmatory factor analysis were conducted to test the measurement model, structural model and research hypotheses. The study identifies four determinants of forex risk strategy of exporting SMEs: degree of internationalisation, forex exposure, perceived forex risk and resources. Organisational and human resources are shown to have a key mediation role in the model. The study provides insights into key determinants of forex risk management and their interrelationships in the little examined context of exporting SMEs.

Could Other Comprehensive Income Contribute to Foreign Exchange Risk Management Discourse?

Could Other Comprehensive Income Contribute to Foreign Exchange Risk Management Discourse?

Avoidance Path of Foreign Exchange Risk Management for Overseas Construction Enterprises in China

Foreign exchange risk management is the focus of overseas construction enterprise management. The quality of its management will affect the profitability of enterprises to a large extent. It is also an important index for comprehensive evaluation of its internal management. The foreign exchange management strategies of China’s overseas construction enterprises mainly include two ways: operational hedging and financial hedging. According to the data of overseas construction enterprises in China from 2011 to 2018, the empirical application shows that enterprises that use only financial hedging have a negative relationship with corporate profits. The better foreign exchange risk management strategy of enterprises should be a comprehensive foreign exchange risk prevention strategy, which mainly relies on operational hedging supplemented by financial hedging.

Kur Riski ve Kur Riski Yönetiminin Firma Performansına Etkisi

It is a known fact that in emerging economies, foreign exchange-based transactions are frequently used in order to achieve economic or financial growth in both country and firm size. As a result of transactions made based on foreign exchange, both countries and companies face exchange rate risk. It is investigated that the effects of the exchange rate risks and foreign exchange rate risk management on the performance of the firm for the Metal Goods, Machinery, Electrical Equipment and Transportation Vehicles Sector in this study. Yearly data for the years 2007-2019 were used in the study. According to the results of panel data analysis, it has been revealed that exchange rate risk and foreign exchange rate risk management reduce firm profitability but do not affect firm value. It was also found in the study that growth, liquidity, leverage and asset turnover are the determinants of foreign exchange risk and foreign exchange risk management. Because of the same results, it is understood that there is not much difference between the exchange rate risk and foreign exchange risk management of firms, that is, they do not sufficiently manage the risks arising from the exchange rate. The results show that business managers need to better manage foreign exchange risks. In addition, it is important that the Central Bank and economic administrations implement policies that will reduce volatility in foreign exchange rates and increase stability.

INDIAN IT FIRMS CREATING MANAGEMENT CODES FOR FOREIGN EXCHANGE RISK

Purpose: India has been a preferred I.T. service sourcing nation globally and has been registering high growth. India has a significant pie of the global sourcing market, accounting for nearly 55 % share. It covers significant global through its more than one thousand centres spread across continents. With a year-on-year growth of 6.1%, India’s I.T. and ITES industry will increase to the U.S. $ 350 million by 2025. The extensive expanse of geographical coverage also translates into foreign exchange risk; hence foreign exchange risk management becomes an important strategy. The current study attempts to assess the impact of foreign exchange risk management on the Indian sector over 2007-2017; the period includes the 2008 financial crisis taken up in the current study.
 Design/Methodology/ Approach: We analyzed the Indian I.T. companies listed on the BSE Ltd on their exposure, approach, and management towards foreign exchange risk. We investigated their annual reports from 2007 -2017 to understand their exposure and the adopted external foreign exchange risk management techniques. We further assessed the impact of these foreign exchange risk management techniques on the firm’s value.
 Findings: The impact of foreign exchange risk management was significant on small-cap I.T. companies for the study period. Though for the during the 2008 crisis term, it was found to be insignificant.
 Practical/Implications: Foreign exchange risk management is crucial for Indian I.T. companies indulging in cross-border trade. The current study incorporates external methods of managing foreign exchange risk management; hence even if the impact were found to be insignificant for Mid Cap and some Large-cap companies, they would be practicing internal hedging methods, which puts a strong case tapping trillion-dollar business through a fully functional competitive International Financial Centre.
 Originality/Value: Our paper contributes to the literature on Foreign exchange risk management by Indian I.T. companies, which contributes handsomely to India’s GDP and Foreign exchange reserve.
 JEL Classification Codes: F31, G32.

A Joint Foreign Currency Risk Management Approach for Sovereign Assets and Liabilities

A sovereign asset and liability management framework for managing foreign currency risk requires a joint analysis of (i) the external financial liabilities resulting from a country’s sovereign debt and (ii) the foreign exchange assets of its central bank. The study recommends a practical approach that includes analysis of the foreign exchange positions of central bank reserves and central government debt portfolios and optimization of the net position. A quantitative method is employed for efficient management of foreign exchange risk. The model is tested for seven countries (Albania, Ghana, North Macedonia, South Africa, the Republic of Korea, Tunisia, and Uruguay).

SENSITIVITY OF THE AZERBAIJANI MANUFACTURING INDUSTRY TO VOLATILITY OF THE EXCHANGE RATE(CASE OF 2015 YEAR DEPRECIATION)

The goal of this article is to investigate the causes of the inadequate reaction of the manufacturing industry of Azerbaijan to the devaluation of the national currency using the dairy industry as an example. To this end, hypotheses are put forward on the dependence on imports, weak production capacities and export experience, and research is being conducted in this direction. Research methods and methodology. The study was based on the well-known studies of modern economists in the field of modeling open economies. In During the study, the author used the method of statistical analysis, the method of comparative analysis and the hypothesis method. The economic and mathematical tools of the work included methods of conditional optimization, analysis of differential equations, as well as econometric and statistical methods: regression analysis, the study of stationarity and cointegration of time series, vector autoregression. The scientific novelty of this article is the conclusions made by tracking down the fluctuations of the national currency associated with the economic crisis of 2015, when there was a sharp decline in production in the manufacturing industry, the causes of the devaluation of the national currency were determined. It is noted that after two sharp devaluations of the Azerbaijani manat in 2015, the country showed signs of an economic crisis, which in some segments, instead of increasing, there was a decrease in production and export. This indicates the presence of problems in the field of foreign exchange risk management in the country's manufacturing enterprises. In conclusion, the author, summarizing his research, notes that an analysis of the production, consumption, import and export of a number of processed products in the period after the devaluation of the national currency in Azerbaijan allows us to draw the following conclusions: Despite a twofold increase in the equivalent of import prices in manats, there was a significant increase in imports of some goods, and this is due to the following two reasons: 1. Some imported products are important raw materials for the manufacturing industry (for example, milk powder), and their production in Azerbaijan was not organized. 2. The import of certain products has been increased in order to replace other more expensive products (for example, vegetable oils have replaced oil).

Inflation Tendency Iin IIndia Iwith ISpecial Reference Ito Indian ICurrency IAgainst Ius IDollar

Foreign Exchange Risk management is technique of mini mising the risk due to fluctuation in value of currency in concern. If we talk of Indian Rupees against US Dollars. It could be without difficulty observed that US dollar look Like to be valued against the value of Indian Rupee with way of time. Although it is tough to comment on any single reason for such sort of appreciation or depreciation of currencies. As there are so many factors at Micro and Macro level like Inflation, Interest Rates, Export-Import, Balance of Payment, Trade Deficit, Currency in Usage, Economic Policies of Nation or Union, Holding Tendency of Forex Traders/ Speculators, Circulation. Although its hard to comment that what accurate currency policy should be accepted so that economy would have sustainable development. The Objective of Research Paper is to study the relationship between Inflation of India and US with alter with value of Rupee against US Dollar. Even if inflation is not separate factor to decide currency price but still imperative factor in formative currency value, as inflation impacts investment, import and exports too. To check the impact of Rupee value in context of US dollars, the data of 30 Years of Consumer Price Index of United States and India along with 1USD=X Rupees value annual has been take and Multiple Correlation/ Regression analysis iSPSS has been applied. Forex Rate is composite variable that depends on a number of macroeconomic variables like Level of Forex Reserve-Low forex reserve is one more reason for currency fall. India‟s forex reserves have declined in recent past. So India has to import these at upper price. When the rupee value gets depreciated -Dollar acquiring strength against other currencies- Dollar acquiring strength against other currencies is another reason as in today‟s world Cross Currency exchange rate also exists due to arbitrage and ease in Global Financial Transactions. Another reason for reduction of currency is: there is no clarity on policy reforms and non clarity on guiding principle in reforms. This research had to find out the relationship between Inflation (Consumer Price Index India, United States) and is gnificant economical factors and got some useful results linked to this. Multiple Correlation/ Regression study has been used to do the analysis based on annual basis.

Foreign Exchange Risk in Albania

Foreign exchange risk is the potential for loss due to an adverse change in foreign exchange rates, and applies to all exchange rate–related products whose positions are valued in a currency that differs from the bank’s reporting currency. Eventual movements in the exchange rate are a risk for investors and businesses with international operations. Therefore, they adopt strategies to minimize the impact of eventual adverse movements. This is known as hedging, and it involves using financial instruments to increase protection against currency fluctuations. Hedging makes transactions, cash flows and cost structures more stable and predictable. There are different strategies which are designed to manage foreign exchange risk. Each of them, however, is constructed under specific assumptions, for a specific risk profile. The question arises as to which strategy would be expected to yield the best results in a given scenario. The first part of the current study describes how do banks measure and hedge the foreign exchange risk by using a set of simulated foreign exchange cash flows to compare the profits resulting from the use of different foreign exchange risk management strategies. The key risk metrics to measure the foreign exchange risk considered for this study are: Value at Risk and Stress Testing. The risk management strategies considered to hedge foreign exchange risk for the study are: forward currency contracts, currency options, and currency swaps. The study analyses and evaluates these foreign exchange risk management strategies to find out which of the strategies is appropriate in particular situations for banks and for non-financial corporates. The second part gives some statistics about open foreign currency position and the risk appetite in the Albanian banking market and how non-financial firms could use financial derivatives to hedge the foreign exchange risk.

Research on Foreign Exchange Risk Management Strategies for Small and Medium-sized Foreign Trade Enterprises

世界科学出版社（World Science Publishing-WSP）立足国际，积极配合中国“走出去”出版战略，大力推进版权输出与引进，并不断拓展国际间的交流与合作，取得显著成绩。WSP国际图书出版项目力倡中国科研人员出版英文图书，出版社具有丰富的国际传播资源与雄厚的编辑、翻译、出版力量，拥有一批著名的中外翻译专家、出版专家，及一支精通国际出版的编辑、翻译和国际营销队伍。探索“科学进步”与“社会进步”是人类永恒主题，WSP推崇以科学信仰引领学术方向，遵循各国法律和地方法规，能够协助您优质、快捷、低

경영자 능력이 환위험 관리에 미치는 영향

경영자 능력이 환위험 관리에 미치는 영향