Review of Literature For Foreign Exchange or Forex

REVIEW OF LITERATURE
Berisha Vlora (2014) examined the role of derivatives in reducing exchange rate risk .The study
based on qualitative data obtained from secondary sources emphasised that efficient management of
currency risk is essential for the survival of a company. Depending on the specific type of currency
risk different hedging strategies should be utilised. policy , a firm should know the level of risk for all
currencies and adapt its policy to the knowledge of the managers regarding the instruments used.
Chaitanya Ch.et al (2015) attempted to study the impact of exchange rate on select Indian IT
companies , Market Price Of Share(MPS) and the tools and techniques used by Indian IT majors to
net their foreign exposures. An analysis of the data collected from various secondary sources revealed
that foreign exchange rate had significant impact on market as a whole.
Vasumathy S (2015) examined the risk management practices of Indian small and medium sector. A
descriptive approach was adopted for getting a deeper insight into the practices. The results indicated
extensive usage of forward contracts, existence of risk management systems in some firms and
comparatively less awareness about derivatives among the firms and insisted that the firms should
monitor exchange rates on a regular basis.
Mittal S (2015) examined how forwards are used by selected Indian companies for minimising
currency exchange risk in an efficient manner .The study conducted on secondary data with a sample
of top 100 companies involved in international trade analysed that majority of the companies were
using forward as their widely used technique for hedging their foreign exchange fluctuation risk as it
helped to stabilise total risk.
Goodhart Marc et all (2015) attempted to identify the factors which determine how
currency rates affect a business‟s cash flows. Risks such as portfolio risks, structural risks
and transaction risks were highlighted. They emphasised that managers should focus on those
currency risks that could lead to financial disruption or distress.
Berisha Vlora (2014) examined the role of derivatives in reducing exchange rate risk .The
study based on qualitative data obtained from secondary sources emphasised that efficient
management of currency risk is essential for the survival of a company. Depending on the
specific type of currency risk different hedging strategies should be utilised. policy , a firm
should know the level of risk for all currencies and adapt its policy to the knowledge of the
managers regarding the instruments used.
Chaitanya Ch.et al (2015) attempted to study the impact of exchange rate on select Indian
IT companies ,Market Price Of Share(MPS) and the tools and techniques used by Indian IT
majors to net their foreign exposures. An analysis of the data collected from various
secondary sources revealed that foreign exchange rate had significant impact on market as a
whole.
Vasumathy S (2015) examined the risk management practices of Indian small and medium
sector. A descriptive approach was adopted for getting a deeper insight into the practices. The
results indicated extensive usage of forward contracts, existence of risk management systems
in some firms and comparatively less awareness about derivatives among the firms and
insisted that the firms should monitor exchange rates on a regular basis.
Dash M et all (2013) made a comparative analysis of the performance of four different
FOREX hedging strategies, approaching the problem from the point of view of exchange rate
dynamics , using a model for exchange rate movements. Based on the results of the
simulation of this model , the hedging strategies which yielded the highest returns and the
lowest variability of returns were identified. The result of the study suggested that : (i) When
cash inflows only are to be hedged, options hedging using out- of-the-money currency put
options yields best results ; (ii) When cash outflows only are to be hedged , options hedging
using out-of-the-money currency call options yields best results;
When both cash inflows and outflows are to be hedged, options hedging using out-of-the-
money currency put options for inflows and out-of-the-money currency call options for
outflows yields best results.
SS Debashish (2008) focussed on foreign exchange risk management practices and

derivative product usage by large non-banking Indian based firms apart from techniques of
risk hedging, the risk evaluation methods adopted and the risk management policy. They
conducted an exploratory survey of both old and new economy corporate to know the
attitudes, perceptions and concerns of Indian firms towards FERM of derivatives and their
uses among the firms .They observed that Indian corporate enterprises were somewhat
halting in their approach to the use of derivatives due to factors like confused perception and
lack of understanding , inadequate support from the Board and other tax, legal and monetary
considerations.

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REVIEW OF LITERATURE

SS Debashish (2008) focussed on foreign exchange risk management practices and

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