Foreign Exchange Risk Management Strategies Through Financial Engineering: An Analysis of Forex Exposure, Transaction Exposure, Economic Exposure, and Translation Exposure

Muhammad  Syahwildan; Ellin Marlina; Erni Putri Setia  Zendrato; Widya Jeihan  Ashari; Tania Melani  Putri; Alfina Ayu  Wardani

doi:10.55927/modern.v4i1.12622

Authors

Muhammad Syahwildan Universitas Pelita Bangsa
Ellin Marlina Universitas Pelita Bangsa
Erni Putri Setia Zendrato Universitas Pelita Bangsa
Widya Jeihan Ashari Universitas Pelita Bangsa
Tania Melani Putri Universitas Pelita Bangsa
Alfina Ayu Wardani Universitas Pelita Bangsa

DOI:

https://doi.org/10.55927/modern.v4i1.12622

Keywords:

Risk Management, Foreign Exchange, Financial Engineering, Forex Exposure, Transaction Exposure

Abstract

This study aims to develop foreign exchange risk management strategies through financial engineering, focusing on Forex Exposure, Transaction Exposure, Economic Exposure, and Translation Exposure. Using a quantitative approach and historical data analysis, it examines the impact of exchange rate fluctuations on corporate financial performance. A case study on an international trading company identifies risk mitigation strategies, such as the use of financial derivatives. The findings indicate that effective risk management strategies can reduce profit volatility by up to 15%. This research presents a comprehensive model for foreign exchange risk management, contributing to financial literature and business practices.

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