FINANCIAL RISK MANAGEMENT STRATEGIES IN DEALING WITH FOREIGN EXCHANGE RATE FLUCTUATIONS
Kata Kunci:
Strategy, Management, Financial Risk, Foreign Exchange Rate Fluctuation.Abstrak
Changes in foreign exchange (forex) rates have a significant impact on the finances of companies that operate internationally. Exchange rate fluctuations can affect profitability, operating costs, and the value of overseas assets, placing pressure on a company's financial stability. This research investigates various financial risk management strategies that can be used by companies to protect themselves from this volatility. The research method used was a literature review. The research found that derivatives, when used appropriately, can significantly reduce the risks associated with exchange rate fluctuations. However, this strategy requires a deep understanding of financial instruments and the forex market, as well as expertise in financial risk management. In addition, the study identified that currency diversification and currency matching are important approaches in risk mitigation that not only protect companies from forex market uncertainties but also help in maintaining liquidity. Another critical factor is the cooperative relationship with international banks that can provide valuable insights and customized solutions for forex risk management.
Referensi
Aabo, T. (2023). The Importance of Corporate Foreign Debt in Managing Exchange Rate Exposure in Non-Financial Companies. SSRN Electronic Journal, Query date: 2024-05-11 14:54:01. https://doi.org/10.2139/ssrn.4357508
Abdul, M., Ingabire, A., Lam, C., Bennett, B., & ... (2024). Indigenous food sovereignty assessment—A systematic literature review. Nutrition & …, Query date: 2024-05-10 07:14:07. https://doi.org/10.1111/1747-0080.12813
Alhajri, A., & Aloud, M. (2024). Female digital entrepreneurship: A structured literature review. … Journal of Entrepreneurial Behavior &Research, Query date: 2024-05-10 07:14:07. https://doi.org/10.1108/IJEBR-09-2022-0790
Ameziane, K., & Benyacoub, B. (2022). Exchange Rate Volatility Effect on Economic Growth under Different Exchange Rate Regimes: New Evidence from Emerging Countries Using Panel CS-ARDL Model. Journal of Risk and Financial Management, 15(11), 499–499. https://doi.org/10.3390/jrfm15110499
Baah, M. O. (2024). EXCHANGE RATE FLUCTUATIONS AND DOMESTIC INVESTMENT: EVIDENCE FROM GHANA. European Journal of Economic and Financial Research, 8(1). https://doi.org/10.46827/ejefr.v8i1.1649
Drebee, H. A., & Razak, N. A. A. (2022). Impact of Oil Price Fluctuations on Economic Growth, Financial Development, and Exchange Rate in Iraq: Econometric Approach. Industrial Engineering & Management Systems, 21(1), 110–118. https://doi.org/10.7232/iems.2022.21.1.110
Durmaz, N., & Kagochi, J. (2022). Asymmetric Exchange Rate Pass-Through in Turkish Imports of Cocoa Beans. Journal of Risk and Financial Management, 15(4), 184–184. https://doi.org/10.3390/jrfm15040184
EFUNTADE, O. O., & EFUNTADE, A. O. (2023). Testing the Cointegrating Relationship between Foreign Exchange Rate Volatility and Government Health Expenditure. Journal of Accounting and Financial Management, 9(2), 45–61. https://doi.org/10.56201/jafm.v9.no2.2023.pg45.61
FASINA, O. T. (2022). EXCHANGE RATE FLUCTUATIONS, FOREIGN DIRECT INVESTMENT AND FINANCIAL DEVELOPMENT IN NIGERIA. Journal of Economics and Trade, Query date: 2024-05-11 14:54:01, 1–10. https://doi.org/10.56557/jet/2022/v7i17447
Fathi, M., Grobys, K., & Kolari, J. W. (2024). On the Realized Risk of Foreign Exchange Rates: A Fractal Perspective. Journal of Risk and Financial Management, 17(2), 79–79. https://doi.org/10.3390/jrfm17020079
Gong, L. (2022). Structural transformation and RMB real exchange rate fluctuations. Query date: 2024-05-11 14:54:01. https://doi.org/10.21203/rs.3.rs-998609/v1
Grobys, K. (2023). Correlation versus co-fractality: Evidence from foreign-exchange-rate variances. International Review of Financial Analysis, 86(Query date: 2024-05-11 14:54:01), 102531–102531. https://doi.org/10.1016/j.irfa.2023.102531
He, Q., Wang, W., & Yu, J. (2023). Exchange rate co-movements and corporate foreign exchange exposures: A study on RMB. International Review of Financial Analysis, 90(Query date: 2024-05-11 14:54:01), 102831–102831. https://doi.org/10.1016/j.irfa.2023.102831
Hecht, A., & Lampenius, N. (2023). How Do Firms Manage Their Foreign Exchange Exposure? Journal of Risk and Financial Management, 16(8), 359–359. https://doi.org/10.3390/jrfm16080359
Lajevardi, H., & Chowdhury, M. (2024). How Does the Exchange Rate and Its Volatility Influence FDI to Canada? A Disaggregated Analysis. Journal of Risk and Financial Management, 17(2), 88–88. https://doi.org/10.3390/jrfm17020088
Le, T. T. M., Martin, F., & Nguyen, D. K. (2023). Tail Risk Transmission in the Foreign Exchange Market: A Quantile LASSO Regression Approach. Contemporary Financial Management, Query date: 2024-05-11 14:54:01, 607–623. https://doi.org/10.4335/2023.3.30
Magoane, R. M., Meyer, D. F., & Muzindutsi, P.-F. (2023). The Asymmetric Effect of Political Risk and Exchange Rate Fluctuations on Foreign Direct Investment Inflows in South Africa. The Journal of Developing Areas, 57(2), 253–268. https://doi.org/10.1353/jda.2023.0032
Maiti, M., & Kayal, P. (2022). Asymmetric Information Flow between Exchange Rate, Oil, and Gold: New Evidence from Transfer Entropy Approach. Journal of Risk and Financial Management, 16(1), 2–2. https://doi.org/10.3390/jrfm16010002
Mohanty, D., Mohapatra, A. K., Tripathy, S., & Matta, R. (2023). Nexus between foreign exchange rate and stock market: Evidence from India. Investment Management and Financial Innovations, 20(3), 79–90. https://doi.org/10.21511/imfi.20(3).2023.07
Nan, L. (2023). The Impact of RMB Exchange Rate Fluctuations on China’s Outward Foreign Direct Investment: An Empirical Analysis. Frontiers in Business, Economics and Management, 11(2), 322–326. https://doi.org/10.54097/fbem.v11i2.12630
Nasry, U., Nuha, U., & Indinabila, Y. (2024). Literature Review And Practical Guide: Bibliographic Research Method In The Formation Of Conceptual Framework. BIMSALABIM: Jurnal Ilmiah …, Query date: 2024-05-10 07:14:07. https://jurnal.iaihnwlotim.ac.id/index.php/salabim/article/view/1113
Ndlovu, T., & Chikobvu, D. (2022). Comparing riskiness of exchange rate volatility using the Value at Risk and Expected Shortfall methods. Investment Management and Financial Innovations, 19(2), 360–371. https://doi.org/10.21511/imfi.19(2).2022.31
Obi, P., & Ogbeide, G.-C. (2022). The Mediating Effects of Implied Volatility and Exchange Rate on the U.S. Tourism-Growth Nexus. Journal of Risk and Financial Management, 15(3), 112–112. https://doi.org/10.3390/jrfm15030112
Pan, G. (2023). The Impact of Exchange Rate Fluctuation on Toyota Financial Performance and Its Hedging Strategy. BCP Business & Management, 43(Query date: 2024-05-11 14:54:01), 270–276. https://doi.org/10.54691/bcpbm.v43i.4647
Risstad, M., Thodesen, A., Thune, K. A., & Westgaard, S. (2023). On the Exchange Rate Dynamics of the Norwegian Krone. Journal of Risk and Financial Management, 16(7), 308–308. https://doi.org/10.3390/jrfm16070308
Sahin, G., & Sahin, A. (2023). An Empirical Examination of Asymmetry on Exchange Rate Spread Using the Quantile Autoregressive Distributed Lag (QARDL) Model. Journal of Risk and Financial Management, 16(1), 38–38. https://doi.org/10.3390/jrfm16010038
Salik, A. M., & Aras, O. N. (2022). The Effects of Trade Openness, Foreign Direct Investment and Exchange Rate Fluctuations on Non-oil Gross Domestic Product Growth. Journal of Management, Economics, and Industrial Organization, Query date: 2024-05-11 14:54:01, 98–117. https://doi.org/10.31039/jomeino.2022.6.1.6
Sun, S., & Zhong, R. (2022). Analysis of RMB Exchange Rate Fluctuations under the Covid-19—Taking the RMB-USD Exchange Rate as an Example. OA Journal of Economy and Management, 1(2), 118–126. https://doi.org/10.26855/oajem.2022.09.010
Swain, S., Jebarajakirthy, C., Sharma, B., & ... (2024). Place branding: A systematic literature review and future research agenda. … of Travel Research, Query date: 2024-05-10 07:14:07. https://doi.org/10.1177/00472875231168620
Wang, J. (2023). Exchange Rate Risk and Foreign Discount in US Dollar Bonds. SSRN Electronic Journal, Query date: 2024-05-11 14:54:01. https://doi.org/10.2139/ssrn.4326975
Wei, Z. (2023). The Impact of Renminbi Exchange Rate and Exchange Rate Volatility on China’s Outward Foreign Direct Investment. Frontiers in Business, Economics and Management, 11(2), 42–48. https://doi.org/10.54097/fbem.v11i2.12160
Wicaksono, B. D., & Syarif, A. D. (2022). The Influence of Inflation, Exchange Rate and Foreign Exchange Reserves on Indonesian Government Bond Yield with the Bank Indonesia Rate as Moderation. JOURNAL OF ECONOMICS, FINANCE AND MANAGEMENT STUDIES, 5(12). https://doi.org/10.47191/jefms/v5-i12-49
Xu, J. (2023). Exchange rate risk management of foreign trade enterprises. BCP Business & Management, 38(Query date: 2024-05-11 14:54:01), 1292–1298. https://doi.org/10.54691/bcpbm.v38i.3885
Zeng, Z. (2024). The Role of Financial Instruments in Corporate Exchange Rate Risk Management. Advances in Economics, Management and Political Sciences, 80(1), 306–312. https://doi.org/10.54254/2754-1169/80/20241899
Zhong, M. (2023). The Case Study Used to Analyze How to Use Financial Derivative to Hedge Foreign Exchange Risk. Highlights in Business, Economics and Management, 15(Query date: 2024-05-11 14:54:01), 281–285. https://doi.org/10.54097/hbem.v15i.9457
Zorgati, M. B. S. (2023). Risk Measure between Exchange Rate and Oil Price during Crises: Evidence from Oil-Importing and Oil-Exporting Countries. Journal of Risk and Financial Management, 16(4), 250–250. https://doi.org/10.3390/jrfm16040250
