THE IMPACT OF EXCHANGE RATE VOLATILITY ON FINANCIAL MANAGEMENT STRATEGIES OF EXPORT-ORIENTED COMPANIES

Authors

Sofyan Abas Universitas Muhammadiyah Maluku Utara
Delvian Zaman Politeknik LP3I
Klemens Mere Universitas Wisnuwardhana Malang

DOI:

Keywords:

Exchange rate volatility, financial management, export-oriented companies, risk management, hedging strategies

Abstract

Exchange rate volatility has become a critical factor influencing the financial decision-making of export-oriented companies in the globalized economy. Since 2020, a growing body of literature highlights how fluctuations in currency values shape firms’ risk management practices, capital allocation, and long-term investment strategies. This literature review synthesizes recent findings to explore the extent to which exchange rate uncertainty impacts hedging policies, pricing strategies, and financial flexibility. Evidence suggests that companies with higher export dependency adopt more proactive approaches, including the use of derivatives, natural hedging, and diversification of markets to mitigate exposure. Moreover, the COVID-19 pandemic and subsequent global economic shocks intensified currency instability, prompting firms to reassess their liquidity management and debt structures. The review also underscores differences across industries and regions, with firms in emerging markets facing greater constraints due to limited access to sophisticated financial instruments. Overall, the findings indicate that exchange rate volatility remains a central challenge in financial management, requiring adaptive, multi-layered strategies to sustain competitiveness in international markets.

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