Currency vs Confidence: A Phased Hedging Playbook for a Growing Exporter

Abstract

Emerging-market exporters face significant foreign exchange risks through unhedged foreign-currency receivables, which expose cash flows and profit margins to currency volatility, especially during Indian Rupee (INR) appreciation. This case describes a real-world advisory engagement at Growth Arrow LLP with a direct-to-consumer MSME exporter. The firm used a simple, phased hedging strategy: maintaining a 50% forward cover on exposures plus selective put/call options for large contracts, complemented by a live dashboard integrating exposure tracking and mark-to-market reporting. These tools combined with education and behavioral uplift helped bridge governance gaps, stabilize cash flows, and preserve upside potential. The solution aligns with Reserve Bank of India’s (RBI) risk management guidelines and regulatory compliance. The case explores export hedging challenges, the design of operational policy embedded in compliance frameworks, and lessons learned from behavioral adoption tactics like explainer content and contract libraries. This adaptive approach highlights balancing risk reduction with managerial bandwidth and client comfort, providing valuable insights for MSME exporters navigating FX risks.