Foreign Exchange Risk Management and Profitability of Deposit Money Bank in Lagos, Nigeria*

Abstract Foreign exchange risk as the risk related with the unexpected changes in exchange rates and foreign exchange exposure as the extent to which unexpected changes in exchange rates affect the value of a firm's assets or liabilities. The use of foreign exchange management strategies results in reduced foreign exchange exposure hence minimal losses. The broad objective of the study is to determine the foreign exchange, risk management and profitability of deposit bank money in Nigeria, while the specific objectives are to analyze the risk associated with foreign exchange management and access the effect of foreign exchange risk management on financial performance. This paper discusses the methods by which the various objectives earlier discussed in chapter one were accomplished. Specifically, this chapter deals with the various methods used for the study. In conclusion, the relevant authorities for instance The Central Bank of Nigeria should adequately put measures to safeguard the value of the domestic currency, this would ensure that the value on the same does not fluctuate much day in day out and finally, the study investigated the relationship between foreign exchange trading and financial performance of commercial banks in Nigeria and aim to shed some additional light on the topics of foreign exchange trading and risk. Finally, it was recommended that relevant authorities for instance the Central Bank of Nigeria should adequately put measures to safeguard the value of the domestic currency. This would ensure that the value on the same does not fluctuate much day in day out.