Tools for hiding currency risk: Application of data analysis
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Abstract (EN)
The fluctuations in the exchange rate expose companies that perform foreign currency forward transactions to exchange rate risk. Exchange rate risk affects the international balance of payments, capital and credit flows, foreign currency denominated debts and receivables, even if they do not participate in international commercial activities, at the end of the change in the value of the national currency. For this reason, businesses use various methods to hedge currency risk. This paper summarizes some of the key issues regarding the measurement and management of exchange rate risk faced by firms, the currently dominant methodologies for measuring exchange rate risk, and widely accepted best practices in currency risk management. The main body of the research consists of businesses operating in the Marmara region. The sample of the research consists of 200 enterprises engaged in foreign trade in the Marmara region of Turkey. Strategies Applied by Businesses to Hedge Transaction Risk Scale was used to collect data. The data obtained from the techniques used by the companies to protect themselves from the exchange rate risk they are exposed to are interpreted with descriptive statistics. These findings, which were revealed as a result of the evaluations and interpretations, showed that businesses use complex and various strategies to manage exchange rate risk. Accordingly, 56% of the enterprises do not have a special unit dealing with foreign exchange risk, while 44.0% have a foreign currency risk management unit. In addition, it has been observed that businesses mostly adopt internal strategies such as collecting their TL receivables in a short time, evaluating their excess cash in foreign currency, and adjusting the raw material rates. It has been determined that although most of the companies use financial methods to hedge foreign currency risks, they have knowledge about forward contracts, currency swaps, futures contracts and options. Accordingly, it has been determined that enterprises have training and knowledge on risk management, but they are hesitant to use this knowledge in practice. Based on the ANOVA analysis conducted for this research, whether financial officials are aware of financial financials according to their titles, changing the use of financial methods, determining the in-house setup method used. However, it was determined that finance directors compared to accounting managers and finance managers had higher in-house simple use, were more aware of financial passwords, and the use of financial methods was higher. In another study, according to large, medium and small-scale net sales revenue, awareness of financial financials and the maintenance of usable internal business strategies were stopped. It was determined that large enterprises are more likely to be aware of financials and use internal business strategies than small enterprises and medium enterprises.
Author
Ayşegül Aydoğdu
Institution
How to Cite
Ayşegül Aydoğdu (Master Thesis). Tools for hiding currency risk: Application of data analysis, 2023, Feyziye Schools Foundation Işık University.
License
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