The effect of using risk management techniques in the face of fluctuations in exchange rates

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Mohanad Akram Rafeeq, Hala Tariq Muhammad


Since the seventies, all countries of the world have suffered from the effects of sharp fluctuations in the exchange rate of the valuation currencies at the international level, and most of the major countries have adopted a floating exchange rate system under which the exchange rates are characterized by their continuous fluctuations and the consequent effects - negative of course - very important for International institutions have activity, whether it is related to financial or commercial activity alike, which happened in the second half of the seventies of the last century for many industrial enterprises with international activity, which necessitated the necessity of facing exchange rate risks by discovering several techniques to prevent or avoid such risks. The researcher reached a set of conclusions and the following recommendations:

  1. The fluctuations in the exchange rate have a decisive effect on the finances of the institution with external relations in its field of activity.

2.The exchange risk management process should be recorded within the general strategy of the institution and the most appropriate technology should be chosen in line with the environment in which it operates.

  1. The risk management of foreign exchange fluctuations for international economic institutions is of the utmost importance, especially in light of the current economic situation characterized by sharp monetary fluctuations.

  2. The developments that developing countries are going through in the field of foreign trade and investment give rise to the urgent need to implement an exchange rate risk management strategy.

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