The applicability of exchange risk management techniques in Turkey and the importance of the practitioners education

Foreign exchange is used with its narrowest meaning as a foreign country?s currency. Havingespecially an exceptional importance in international trade, it is used in a widespread way in internalmarkets. However, as there are different systems used in determining foreign exchange rates, it ismaking it difficult to speculate on exchange rates in particularly countries which use the free floatingexchange rate system. This makes trade transactions using foreign exchange more risky. However it isnot impossible to reduce this risk.Removing this risk caused by variations in exchange rates is dependant on guessing futureexchange rates and the outcoming risks. At this point, exchange risk management techniques are ofgreat importance for firms.Application principles and productivity of exchange risk management techniques in Turkey,practitioners and their educational background is the subject of this research. Data related to theresearch has been obtained by applying a questionnaire to 51 firms registered at the Istanbul Chamberof Commerce (ITO).According to the research results, managers and personnel working in financing, riskmanagement or exchange management units are mainly university graduates or have a master?sdegree. Personnel having a master?s degree usually received business administration education,whereas university graduates received economics and administrative sciences education. In order toeliminate exchange rate risks, only one kind of exchange is used for transactions within the firm thushedging, and forward contracts as the most common hedging technique without the firm. However,infrequency of use indicates that firms in Turkey undervalue exchange risk management techniques.The most important result of this research is that considering the economical conjunction ofTurkey, firms believe that exchange rate risk management is of utmost importance for firms trading inforeign currencies. This belief is an indication of rising awareness of firms on exchange rate riskmanagement.Keywords: Foreign Trade, Exchange rate risk, Hedging