The Use and Extent of Foreign Currency Derivatives in Pakistan: Obstacles and Future Prospects

Abstract

We are living in the 21 51 century when changes occur on the international arena at every moment and we are connected to these changes because we are integrated to this global and fast moving village. Increased volatility (in interest rate and exchange rate) bring profound implication on the way as well because of how this financial risk has been tackled by the finns, has been the most important and tricky question. Along with the free market policies, living in this competitive financial environment, the usage of derivatives for risk management purposes (hedging) has increased over time in order to reduce these fluctuations in interest rate, exchange rate and other important variables as they have impact on firm's future cash flow, value and competitive position (Afza and Alam, 20 II).