THE MANAGEMENT OF THE FOREIGN EXCHANGE RATE RISK IN FOREIGN TRADE: CASE STUDIES FOR A REPRESENTATIVE TURKISH FOREIGN TRADE FIRM

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The objective of this paper is to demonstrate how foreign trade firms faced with open foreign currency position due to the foreign trade operations with maturity can effectively manage foreign exchange rate risk. Firstly, some facts related to foreign exchange rate risk are defined, and then the procedures which risk-averse foreign trade firms can follow to eliminate foreign exchange rate risk are discussed. Accordingly, the theoretical information on foreign exchange rate risk and its management are presented, and then the recent fluctuations in some major foreign exchange rates in Turkey are illustrated. Finally, some techniques that a representative Turkish foreign trade firm with net open foreign currency position can apply to hedge against foreign exchange rate risk are introduced.

93

Floating Foreign Exchange Rate Regime , Open Foreign Currency Position , Import , Foreign Exchange Rate Risk , Hedging

Journal Of Financial Researches an‎d Studies

112

Journal Of Financial Researches an‎d Studies