Management Strategies of Foreign Exchange Risk in Multinational Firms

Multinational companies are now exposed to risks caused by unexpected movements in exchange rate. Foreign exchange risk management has become essential for the success of multinational companies in today's volatile financial markets. Risk is an undeniable reality of doing business globally. A successful entrepreneur should not fear risks, but strives to understand it, manage it, and take advantage of it. The purpose of this paper is to explore the multinational firms' exchange risks, to determine and explore how to treat the transactional exposure, translation exposure and economic exposure through creation of exchange risk management strategies to minimize foreign exchange risks.