Global Journal of Commerce & Management Perspective
Open Access

Abstract

Foreign Exchange Risk Management Practices: A Study on Ludhiana Textile Exporters

Mr. Nitin Goel and Dr. Rajesh Kumar

With the globalization of Indian economy the trade and investments have increased with other countries. All such developments combine to give a boost to cross-currency cash flows. The corporate enterprises in India have come across currency risk exposure and need for application of innovative hedging techniques has arisen for protecting themselves against attendant risks. It is in this context that a review of the perceptions and concerns of the textile exporters in Ludhiana, in relation to derivatives and of their initiatives in tuning the organizational set up to acquire and adopt the requisite skills in risk management, assumes significance. In this study it is found that the textile exporters in Ludhiana are using hedging tools to overcome the risk of loss due to change in foreign exchange & they are satisfied with what they are practicing & prefer using the same in order to minimize their foreign exchange risk. But according to the opinion of majority of the exporters forecasting & risk estimation are the most important practices than hedging & factors like profitability, sales growth & leverage are more affecting the decisions to minimize foreign exchange risk. In order to manage risk exporters are more dependent on In-house expertise & taking less help from the consultancies which has increased their risk of loss.