Kaula Stephen
The study aims at assessing the determinants of effective hedging mechanisms against economic foreign exchange exposure. Using a panel data in the time interval of 2012 to 2022, the data regarding the study under examination were obtained. Data pertaining foreign macroeconomic and control variables were retrieved from World Bank databank. Moreover, using regression and descriptive analysis methods the results were presented containing foreign macroeconomic and control variables. The results of analysis showed that positive net export (net capital); enhanced national output; and reduced unnecessary government spending significantly determined the effectiveness of hedging mechanisms of economic exposure. It was moreover revealed that for the revealed foreign macroeconomic variables report great and more significant determination in hedging economic exposure then the model relationship is to be intruded with industry/country specific factors (control variables) which also indicate to be positive and significant determinants of effective hedging mechanisms. Thus, it is from such impressing results the current study recommends that the exporting and importing firm/country has to be adequately strong internally. Once the multinational companies or firm /country is sustained internally, hedging external macroeconomic foreign exchange market exposure become not an issue.