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The Administration of Foreign Exchange Risk for Sinaloa's Micro-Industries That Purchase Imported Inputs: A Case Study

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  • José G. Vargas-Hernández

    (University Center for Economic and Managerial Sciences, University of Guadalajara, Mexico)

Abstract

The present work is related to the administration of the exchange risks in an industrial microenterprise of Sinaloa; its objective is to contrast the effect obtained on the decision-making process by managing the exchange risks inherent in the businesses that buy imported raw materials in order to be able to produce their goods that they commercialize. For this reason, it is based on a literature review containing scientific articles, books, and theses where evidence was found that it is possible to reduce risk through the use of derivative instruments such as European futures and options contracts. The methodology is qualitative with the case study. The results indicate that is possible. The results indicate that it is possible to manage the exchange risk using derivative products in the microenterprise studied.

Suggested Citation

  • José G. Vargas-Hernández, 2021. "The Administration of Foreign Exchange Risk for Sinaloa's Micro-Industries That Purchase Imported Inputs: A Case Study," International Journal of Risk and Contingency Management (IJRCM), IGI Global, vol. 10(2), pages 1-17, April.
    • Handle: RePEc:igg:jrcm00:v:10:y:2021:i:2:p:1-17
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