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VOL. 12, ISSUE 1 (2026)
Foreign exchange exposure and hedging practices in indian software companies
Authors
Shankara M, Dr. Ranjini M L, Dr. Raghavendra R H
Abstract
The present study explores the strategies
employed by Indian software companies to manage foreign exchange (Forex) risk
through financial derivatives. Given the global nature of the software
industry, Indian firms primarily depend on exports, making them highly
susceptible to fluctuations in exchange rates. While Forex risk cannot be
completely eliminated, it can be effectively managed using derivative
instruments such as forward contracts, options, and swaps. The extent to which
a company engages in risk management depends on the size of its foreign
currency exposure and the volatility of exchange rates. Effective Forex risk
management is crucial for maintaining financial stability, sustaining
profitability, and ensuring long-term business growth. This paper aims to
bridge the existing research gap by examining how Indian software firms assess
and mitigate their Forex exposure through derivative instruments. By
documenting industry practices, the study provides valuable insights into the
role of financial derivatives in managing currency risk, thereby contributing
to the broader discourse on risk management in export-driven industries
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Pages:51-55
How to cite this article:
Shankara M, Dr. Ranjini M L, Dr. Raghavendra R H "Foreign exchange exposure and hedging practices in indian software companies". International Journal of Commerce and Management Research, Vol 12, Issue 1, 2026, Pages 51-55
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