EFFECTS OF FOREIGN EXCHANGE RISK MANAGEMENT TECHNIQUES ON PROFITABILITY OF LOCAL BASED MULTINATIONAL CORPORATIONS LISTED IN KENYA

Abstract

The main objective of this study was to establish the effects of the foreign exchange risk management techniques on the profitability of local based Multination Corporations listed in Kenya. The study intended to identify the influence of forward contracts, futures contracts, swaps contracts and options contracts on the firm profitability of local based multinational corporations listed in Kenya. The target population of the study was the risk managers of the local based Multinational Corporations listed in Kenya, which were 32 in number. The study found out that forwards contracts positively and significantly affect the profitability, futures contract also positively and insignificantly affect the profitability, options contracts positively and insignificantly affect the profitability and lastly swaps contract positively and significantly affect the profitability. The study concluded that foreign exchange risk management techniques influence profitability.