Hedging against the exchange rate risks in international trade: A case of Nurol Holding

In the early 1970?s, with the collapse of fixed exchange rate system, the increased exchange rate risks affected countries, industries, and companies. It also has made significant effects on the marketing values of companies. Because of that, companies started to understand the urgent need for understanding the nature and importance of exchange risk management.There are several internal and external hedging techniques that companies might use for avoiding the exchange rate risks. The internal hedging techniques are mainly related to the financial situation of the company. On the other hand, external hedging techniques are contracts that companies make with specialized banks or institutions.This study which mainly aims to highlighting the importance of exchange rate risk management and how to use the hedging techniques to protect the value of company in case of exchange rate risk is organized as follow: In the first part of the study, we try to explain the effects of exchange rate risk on the company which involves international economic activities. In the second part of the study, we explain the exchange rate risk management and hedging techniques. Finally, we examine how Nurol Holding uses hedging techniques to avoid exchange rate risks. The results of the case study indicate that Nurol Holding understands the importance of hedging techniques and uses them successfully.