Title: Currency risk management in India through hedging

Authors: Varuna Kharbanda; Archana Singh

Addresses: Maharaja Agrasen Institute of Management Studies, Delhi, India ' Delhi School of Management, Delhi Technological University, Bawana Road, New Delhi – 110042, India

Abstract: This study attempts to understand the hedging practices of Indian companies and comprehend their hedging effectiveness methods by conducting in-depth interviews with 30 treasurers of Indian companies. The study further evaluates the effectiveness of the forwards, which is the most used derivatives contract by these companies. The results identify the one-month forwards as the most effective derivative instrument for managing the currency risk which the treasurers of the companies facing this risk should use. In the wake of rising importance and stress on evaluating the effectiveness of hedging, these results are useful for the treasurers of the companies and the policy makers to understand and identify better models for measuring hedging effectiveness.

Keywords: currency risk; exchange rate fluctuations; derivative hedging; risk management.

DOI: 10.1504/IJBG.2023.133267

International Journal of Business and Globalisation, 2023 Vol.34 No.3, pp.318 - 336

Received: 04 Sep 2019
Accepted: 08 Mar 2020
Published online: 11 Sep 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article