| dc.description.abstract | Foreign exchange risk has become a more important component of risk management in
light of the globalization and internationalization of world markets following increased
exposure of firms engaged in international trade. The objective of this study was to
establish the strategies adopted by firms in the Export Processing Zone in Athi River to
manage foreign exchange rate risk. The specific objectives included establishing the
strategies adopted by firms in the Export Processing Zone in Athi River in the
management of foreign exchange rate risk and determining effectiveness of the foreign
exchange rate risk management strategies adopted by firms in the Export Processing
Zone in Athi River in the management of foreign exchange rate risk. This study adopted a
descriptive, cross-sectional research design. The target population of the study comprised
45 firms registered at the EPZ Athi River. The study used primary data collected using a
questionnaire. The collected questionnaires were inspected for completeness and entered
into data analysis software. From the findings, the firms in the export processing zones
use various strategies to manage foreign exchange risk exposure, forward contract in
foreign currency the and enter into a contract to sell/purchase a set amount of foreign
currency at the predetermined price in a given future date, spot rate that allows them to
manage foreign exchange fluctuations and also use spot rate existing on the day of
transaction for majority of our foreign currency transaction. The study recommends that
firms in the export processing zones need to employ risk management policies aimed at
reduction of bankruptcy and distress costs, reduction in expected tax payments, reduction
in expected payments to stakeholders and reduction in cost of raising funds. | en_US |
