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The Role of Foreign Exchange Trading in Strengthening Business Resilience

DOI : https://doi.org/10.36344/ccijemms.2023.v05i06.005
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Abstract: Foreign Exchange (Forex) trading plays a crucial role in strengthening business resilience by mitigating financial risks associated with currency fluctuations. Despite its significance, Forex trading remains an underutilized tool among Small and Medium Enterprises (SMEs) due to limited financial literacy, regulatory barriers, and lack of access to sophisticated trading instruments. This study explores how businesses can leverage Forex trading to enhance financial stability, sustain growth, and improve international market competitiveness. Using a qualitative case study approach, data was collected through semi-structured interviews, document analysis, and observational research, followed by thematic coding using Nvivo software. Findings reveal that businesses that actively engage in Forex trading exhibit greater resilience against economic downturns, ensuring stable cash flows, predictable pricing strategies, and enhanced profitability. Firms that utilize hedging mechanisms such as forward contracts, options, and currency swaps can mitigate the adverse effects of exchange rate volatility, facilitating sustainable international trade expansion. However, regulatory complexities, lack of financial education, and high transaction costs hinder many businesses from incorporating Forex risk management into their financial strategies. This study recommends financial literacy programs, policy reforms, and technological advancements to enhance SME access to Forex trading. Additionally, collaboration between governments, financial institutions, and business organizations is necessary to develop a supportive ecosystem for currency risk management. Future research should explore the longitudinal effects of Forex trading, sector-specific applications, and cross-country policy comparisons to further understand how businesses can integrate Forex trading into their resilience planning.

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Dr. Afroza Begum

Lecturer, Dept. of Pharmacology and Therapeutics, Shaheed Monsur Ali Medical College & Hospital, Uttara, Dhaka-1230, Bangladesh

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