CURRENCY RISK MANAGEMENT IN THE GRAIN MARKET: THE CASE OF UKRAINE

Abstract

B a c k g r o u n d . Ukraine is one of the important participants in the global grain market, playing an important role in ensuring global food security. Businesses in Ukraine that are involved in the grain trade and have transactions in foreign currencies need to protect these financial transactions effectively. However, most research works about currency risk management are focused on the context of risk management of financial institutions, not trading companies. The purpose of the study is to develop an algorithm and identify the characteristics of currency risk management on the Ukrainian grain market.

M e t h o d s . The article employs common research methods, including analysis and synthesis, statistical methods, comparative analysis, case studies, and expert evaluation. The use of these methods allowed to conduct an in-depth study of currency risk for Ukrainian grain market entities, to identify the current trends on currency market in terms of its volatility, and to develop the recommendations on currency risk management methods.

R e s u l t s . The study confirms that managing currency risk on the Ukrainian grain market is a complex process involving several stages. The first stage is the qualitative identification of currency risk. Different types of currency risks faced by grain companies are described and justified. It was determined that an essential part of the next stage in currency risk management for a grain company is calculating the net currency position. The study emphasized that the quantitative assessment of currency risk is influenced by economic factors such as fluctuations of the US dollar on the foreign exchange market, NBU exchange rate decisions and the volume of the foreign currency reserves, and Ukrainian trade balance. It was found that, at the third stage of currency risk management, the primary objective is to select a management method aimed at eliminating or minimizing the impact of currency fluctuations on a grain company financial indicators.

C o n c l u s i o n s . It was determined that each of the currency risk management methods studied for the grain market has its own advantages and disadvantages. The use of currency forward and option contracts is proposed as currency risk management methods, tailored to different economic scenarios. It was concluded that the key stage is monitoring of the effectiveness of these currency risk management methods to continuously evaluate and adjust the approach in the dynamic currency environment by grain companies.