Exchange Rate Risk Exposure Measurement and Hedging Strategy Optimization for Multinational Enterprises

DOI

10.2991/978-94-6463-811-0_17How to use a DOI?

Keywords

Exchange rate risk exposure; hedging strategy optimization; multinational enterprises; dynamic risk measurement; multi-instrument portfolio

Abstract

In the context of globalization, multinational enterprises (MNEs) are increasingly exposed to exchange rate fluctuations, which pose significant threats to their financial stability and operational performance. This paper aims to explore the measurement of exchange rate risk exposure and the optimization of hedging strategies for MNEs. First, it reviews the classic measurement methods such as the Adler-Dumas model and the Jorion model, analyzing their applicability and limitations in the modern economic environment. Through empirical analysis based on panel data of listed MNEs, the study finds that there are significant differences in exchange rate risk exposure across industries, with manufacturing enterprises being more sensitive to currency fluctuations than service-oriented enterprises. Subsequently, the paper discusses the current status of hedging practices, including the use of financial derivatives, operational hedging, and strategic hedging, and identifies common issues such as excessive reliance on forward contracts and insufficient consideration of nonlinear risk relationships. Based on these findings, an optimized hedging framework is proposed, integrating dynamic risk measurement, multi-instrument portfolio, and real-time monitoring mechanisms. The research contributes to a deeper understanding of exchange rate risk management for MNEs and provides practical insights for improving their hedging effectiveness.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Yu Chen
PY  - 2025
DA  - 2025/08/14
TI  - Exchange Rate Risk Exposure Measurement and Hedging Strategy Optimization for Multinational Enterprises
BT  - Proceedings of the 2025 5th International Conference on Enterprise Management and Economic Development (ICEMED 2025)
PB  - Atlantis Press
SP  - 163
EP  - 171
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-811-0_17
DO  - 10.2991/978-94-6463-811-0_17
ID  - Chen2025
ER  -