Interest rates, foreign exchange rate exposure and firm value: a case of Uganda Telecom Limited (2000 – 2006)

Abstract

This study focused on the Interest rate, Foreign exchange rate exposure, application of risk management techniques and firm value – a case study of Uganda Telecom Limited. The relationship between Interest rate, Foreign exchange rate exposure, application of risk management techniques and firm value is important in highlighting how a non- financial firm can attain value and sustainability while operating with borrowed funds and importing most of its inputs. A conceptual model adopted from Bordnar, Hayt and Martson (1998) was used as a guide on assessing the relationship between the study variables. Using existing Audited accounts from Uganda Telecom Limited that was analysed using SPSS, from which Zero order correlations were used to summarise the results obtained from the secondary data. The main findings showed positive relationship between the study variables, implying that firm value would be attained with improved application of risk management techniques as these would result into decreased exposures in terms of Interest rate repayments and Foreign exchange transactions, acting as a big source of savings for the company – Uganda Telecom Limited.