A survey of the hedging strategies used in managing transaction risk exposure in International Trade
Abstract
This project studied the hedging strategies used in managing transaction exposure in
international trade. The population of study was all the companies classified in the
commercial and allied market segment of the Nairobi stock Exchange. Of the twelve
firms in the commercial and services segment of the Nairobi Stock Exchange, eleven
firms responded which represented a 92% response rate. The mode of data collection
was by use of questionnaires. The respondents had a fair knowledge of the firms they
worked for
In the firms under study 36% had a risk management department that managed the
foreign exchange risks while 64% did not have. Of the firms without a risk management
department, the responsibility of managing foreign exchange risk rested with the
following departments in order of preference finance department 57%, accounts
department 29% and treasury 14%.
The policy makers should review the impact that foreign exchange management policy
has on the share holder value and/or share holder wealth since the study shows that
45% of the firms have no foreign exchange management policy. Policy makers should
look into the way of assisting businesses manage transaction exposure considering that
56% of studied firms had transaction exposure as the highest foreign exchange risk
exposure.
Publisher
University of Nairobi
Description
MBA Thesis