A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUREMENT FOR THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION IN FINANCE

Abstract

A gradual increase in foreign exchange market volatility in recent years has increased the need for management of foreign exchange exposure. Charities and nongovernmental organisations were not participated in foreign exchange market in the past decades. But as their foreign exchange volume and intervention countries increased their hedging needs are becoming more important and it leads them to exercise hedging strategies. Accordingly management of foreign exchange translation exposure has helped many nongovernmental organizations to implement projects without compromising their quality and equity. The objective of the study was to examine the management of foreign exchange translation exposure in the case of SOS Sahel Ethiopia. In this study exploratory research design approach was adopted. The target population of this study included management team of the organization both in Addis Ababa and project sites in different regions of the country. Simple random sampling technique was used to select 35 respondents. This study used questionnaires and interview questions for primary data collection and secondary data collected from financial records of the organization. Quantitative data was analyzed using descriptive analysis. Data collected through open ended questions and interviews was analyzed qualitatively through content analysis. The study summarized and concluded that management of foreign exchange translation exposure contributes a lot to the financial sustainability of the organization and it has to be backed up with workable policies, procedures and systems. It also required well experienced and qualified personnel’s to formulate workable financial strategies and prevent the organization from extraordinary losses. In order to prevent the organization from foreign exchange translation exposure and stayed sustainable, the study recommended to adopt a well designed foreign exchange translation exposure management policy, proven translation methods and hedging techniques.