HEDGING INSTRUMENTS AS A TOOL FOR CASH FLOW AMONG IMPORTERS AND EXPORTERS.

Hedging instruments are the effective tools for foreign exchange exposure management. The aim of the research is to estimate the awareness among the importers and exporters on hedging instruments for managing their foreign exchange exposure. Snowball sampling was used to select the samples considering the sensitivity of the data. Importers and exporters were chosen from different sectors like leather, automobile, textile, chemicals and jewellery. From the analysis, we infer that the awareness about the internal and external hedging instruments are good. The most used currency derivatives are swaps followed by forwards. Multicurrency billing along with price adjustment and adjusting the exchange risk on the sales are the most common internal hedging instruments used. The study suggest that hedging instruments can be more discussed and recommended for the exporters and importers based on their sectors for their effective cash flow management.