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Fluctuations in exchange rates are an influential factor in international trade because they affect both the ability of exporters to sell goods abroad and the ability of importers to buy them. Entering foreign markets has proven to be an excellent way to escape in times of crisis, especially when demand in domestic markets falls sharply. In this environment, companies are advised to look for growth opportunities in markets outside the EU, where the impact of the crisis will be less severe. A favorable exchange rate will help speed up the recovery process, so we will analyze the impact of the exchange rate on exports.


The exchange rate determines the relative value of one currency against another. Some countries fix the value of their currency against the value of the US dollar. There are also agreements between countries to use a common currency with a fixed exchange rate, as was the case in the European Union when the euro was introduced.

The exchange rate of a currency can be set by the monetary authorities of each country. Such a regime is called a fixed exchange rate regime and usually involves market intervention to ensure that the exchange rate is maintained. On the other hand, in the international financial markets, this exchange rate is freely set according to the law of supply and demand and according to confidence in the economic strength of the country or region to which each currency belongs. Such an exchange rate regime is called flexible or floating. Such an exchange rate is currently used against major international currencies, including the US dollar, the euro and the Japanese yen.


Changes in the exchange rate have a significant impact on a country's export potential. To understand how this works, remember that, in general, an importing agent must pay for the purchase of goods in the currency of the exporter-in other words, it must purchase that currency in exchange for the currency of its country or market. When the currency of the exporting country is devalued against the currency of the importing country, the purchasing power of the latter increases. In a sense, there is a decrease in the relative value of the commodity because the exchange rate allows it to buy more currency to pay the supplier in the country of origin. Conversely, the appreciation of the currency of the exporting country against the currency of the importing country reduces the purchasing power of the importing country. This is because it will have to pay more money in its own market currency to acquire enough currency to pay for the transaction.


Fluctuations in exchange rates can affect the profitability of foreign trade transactions. The greatest risk arises when payment is made on credit or on a deferred basis, that is, some time after the goods have been purchased. In the period between the purchase of goods and their payment, exchange rate fluctuations may occur, which may make the transaction cheaper or more expensive for the exporter. In order to minimize currency risk, various tools can be used. On the one hand, it is possible to use an internal hedging method by signing contracts exclusively in local currency or by making payments and collections at the time of contract conclusion. On the other hand, you can use external hedging methods, such as exchange rate insurance, currency options.

In addition to traditional methods of currency risk management, such as hedging and using forward contracts, companies can consider setting up multi-currency accounts. This allows them to hold funds in different currencies, which provides flexibility when making international payments and allows them to respond to changes in exchange rates. Multi-currency accounts can also help avoid the need for currency conversions and the associated costs.

Another strategy may be to enter into contracts with a currency clause that fixes the exchange rate on the date of the transaction. This approach can be useful for long-term contracts where currency fluctuations can significantly affect profitability. Additionally, using analytical tools to forecast currency trends helps companies make more informed decisions and better plan their export activities.

Many companies are also turning to diversifying their suppliers and customers across different countries with different currencies. This helps reduce dependence on one particular currency and lessen the impact of negative exchange rate movements. For example, if one country's currency starts to fall, a company can compensate by increasing exports to countries with more stable currencies. Thus, geographic diversity not only reduces currency risks, but also helps a company become more resilient to fluctuations in the global market.

Investing in automated financial and risk management systems can significantly improve the efficiency of managing currency fluctuations. Modern software solutions offer capabilities to automatically monitor exchange rates, analyze trends and predict changes. This allows companies to react quickly to any fluctuations and make informed decisions, minimizing potential losses and making the most of favorable conditions. This approach ensures proactive management of currency risks and contributes to the stability of export activities.