FOREIGN EXCHANGE RISK MANAGEMENT IN THE NIGERIAN ECONOMY AND ITS IMPACT ON THE PROFITS OF BANKS IN NIGERIA
Abstract
This study investigates foreign exchange risk management in the Nigerian economy and its impact on the profitability of banks. Exchange rate volatility poses significant challenges to banks engaged in international transactions and foreign currency operations. The study adopts a descriptive research approach using secondary data from financial reports and regulatory publications. Findings reveal that effective foreign exchange risk management strategies, including hedging, diversification, and asset-liability matching, significantly enhance bank profitability. Conversely, poor risk management exposes banks to losses and financial instability. The study concludes that foreign exchange risk management is crucial for sustaining profitability in the Nigerian banking sector.
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