Currency Risk Management, Technological Transformation, and Strategic Hedging: An Integrated Analysis of Global Corporate FX Practices

Abstract

The increasing volatility of foreign exchange (FX) markets has transformed currency risk from a peripheral financial concern into a central strategic issue for globally operating firms. Export-driven industries, geographically diversified corporations, and firms operating in emerging markets are particularly exposed to fluctuations in exchange rates that can materially affect competitiveness, cash flows, investment decisions, and long-term firm value. This research article develops a comprehensive and integrative analysis of corporate FX risk management by synthesizing classical financial theories, empirical evidence, and recent institutional and technological developments strictly based on the provided literature. Drawing on foundational work in corporate risk management, selective hedging, and market timing, the study situates contemporary FX practices within a broader theoretical framework that emphasizes coordination between financing, investment, and operational strategies. The article further explores the role of geographical diversification and natural hedging as structural mechanisms to mitigate currency exposure, particularly in emerging markets such as India and Brazil. Special attention is given to the accelerating role of technology, including cloud-based FX platforms, artificial intelligence, sentiment analysis, and algorithmic hedging tools, which are reshaping how firms identify, measure, and manage currency risk. Regulatory interventions by central banks and governments, including currency controls and market stabilization efforts, are analyzed as external constraints and enablers of corporate FX strategies. Through an extensive descriptive and interpretive analysis, this article highlights how firms balance hedging and speculation, navigate governance and managerial incentives, and adapt to a rapidly evolving FX environment characterized by heightened uncertainty and technological disruption. The findings contribute to the literature by offering a unified perspective that connects traditional hedging theory with modern digital transformation and regulatory dynamics, thereby providing a robust foundation for future empirical and policy-oriented research on corporate currency risk management.