The impact of exchange rate volatility on profitability in retail organizations (Case of Ok Zimbabwe) (2011-2021).
- Author
- Tagwida, Armshell
- Title
- The impact of exchange rate volatility on profitability in retail organizations (Case of Ok Zimbabwe) (2011-2021).
- Abstract
-
Empirically investigating the impact of exchange rate volatility on profitability of retail businesses (Case of Ok Zimbabwe) will assist the retail industry in strategizing ways to counter challenges imposed by volatility in exchange rate. This study covered a period of eleven years from 2011 to 2021 to determine the impact of exchange rate volatility on profitability performance of Ok Zimbabwe. Using time series data from the World Bank, Ok Zimbabwe and RBZ this study analysed the impact of exchange rate volatility on profitability performance in retail businesses (Case of Ok Zimbabwe). A Multiple regression analysis tool was computed in this research where the econometric model was estimated using E-views 7.1 package and ordinary least square (OLS) estimation method. The exchange rate was the independent variable of interest in this research. Interest rate and inflation are also other macroeconomic independent variables included in the model while profitability was the only dependent variable in this study. The findings showed that exchange rate is statistically significant in explaining profitability performance, over the period under study, there had a negative contribution to profitability performance with a 1% increase in exchange rate leads to US$71725.59 decrease in profit. Inflation also indicate a significant effect on profitability. Even though the business has a forward pricing approach but the results from regression on this research showed that the inflation rate has a negative relationship to profitability with a unit increase in inflation result in a decrease of USD$8562.062. The variable interest rate also showed significant negative impact on profitability. The results indicated that every unit increase in interest rate result in decrease in profit by US$517858.20 thereby having a negative impact with profit. It should be emphasized that the Zimbabwean government must adopt strategies to stabilize currency value. There should be industries and production in the nation so that the local currency’s purchasing power cannot be highly depending on its acceptance to other nations for imports. The retailers should also contribute on Value addition and beneficiation in order for them to maintain their competitiveness and fetch a higher price on the global market. The government of Zimbabwe should have strategies that convince investors to do business in Zimbabwe. This can be done by providing access to low- interest loans, grants and other financial incentives. This research did not cover other macroeconomic factors such as GDP, Tax policies and political influences on business performance therefore, future studies and look forward to research on those factors.
- Date
- June 2023
- Publisher
- BUSE
- Keywords
- Exchange Rates
- Business Perfomance
- Supervisor
- N/A
- Item sets
- Department of Accountancy