“Exchange Risk Issues & Challenges Confronted Across Diamond & Jewelry Industry” – A Study on EXTERNAL Mitigation Strategies

Abstract

Diamond Exporting & Jewelry Making Industry is largely exposed to foreign exchange risk. These industries are having large cash outflow due to imports of gems, precious metals & other inputs needed for rendering services to the customers at the same time, this industry earns foreign exchange from exporting them. Major chunk of transactions is denominated in foreign currency. Substantial amount of, nearly 75% of inflow & out flow which occurs in foreign currency, these companies need to design appropriate risk management techniques to mitigate the foreign exchange risk. Appreciation & depreciation of home currency leads to losses for the company. This paper examines the currency risk management practices of top ten listed companies chosen under Diamond Exporting & Jewelry Industry. The companies were selected based on exchange exposure & MV of the o/s shares. The period selected for the study is post introduction of currency derivative i.e FY 2009 to 2017.