Exchange Rate Volatility and International Trade

A vigorous economy is one where both exports and imports are experiencing growth. This characteristically indicates economic potency and sustainable trade surplus or deficit. Organizations and traders count upon prevailing exchange rates to forecast amounts to produce imports and exports-IMPEX. Thus affected by the exchange rate volatility. Over and above this, there is a currency conversion cost in international trade. Traders use a number of products in financial markets to hedge against currency fluctuations; these include among others forwards contracts. This is especially true for short-term hedging than long-term hedging. The book attempts to explore the exchange rate variation and analyzes the effects on the export performance of select engineering companies in India.