When a business begins to transact internationally, it faces the challenge of foreign exchange risk, which means that currency values can fluctuate and increase costs. Several factors contribute to this volatility, including political instability, market reactions to world news or weather events, and more. According to the National Bureau of Economic Research (NBER), recent research shows that exchange rates are primarily driven by sudden changes in financial markets. Factors such as short-term trading, shifts in investor preferences, and the cost of holding currency also drive these fluctuations.
The impact of exchange rate fluctuations should not be underestimated. Currency rates can vary widely, causing unexpected changes in the value of overseas payments. While this can affect profitability, it also makes the financial management of international transactions more difficult.
Galina Pliushcheva, a Ph.D. economist and owner of trucking company Original King Delivery Services & Business Ideas (OKD), has found a solution to this challenge. Her concept involves implementing a unified currency model across regional associations that considers both predictable and unpredictable factors that affect exchange rates, including market dynamics and rare, high-impact events. By incorporating variables such as resource prices, foreign exchange markets, and digital currencies, Pliushcheva’s model aims to minimize currency risk and reduce transaction costs. This approach offers a more stable financial environment, helping companies manage global transactions more effectively and maintain profitability despite currency fluctuations.
Pliushcheva’s method is fully described in her dissertation, which she defended in 2022 at MGIMO, one of Russia’s top universities. While working on it, she actively presented her findings at various conferences and forums. In 2020, at the international EU-EAEU conference, her speech was recognized as one of the best. Her work is known for its clear language, which makes it accessible even to those without a deep background in the subject. The dissertation aims to help both large and small business owners who are engaged in international transactions, which are increasingly common nowadays. “To understand the importance of assessing currency risks and the ease of applying the results of scientific research, it is enough to simply read the work,” Pliushcheva said.
Her company, OKD, is set to benefit from these innovative insights as it embarks on an ambitious expansion plan. Over the next five years, OKD plans to open new offices in Chicago and New York, develop its brokerage firm to enhance its market operations, and expand its fleet to 150 and 200 trucks. The company will also build facilities for truck maintenance and driver rest, creating numerous employment opportunities. A critical component of OKD’s strategy is its expansion into transportation services in the US, Canada, and Mexico, where its single currency model could also be implemented.
“We also plan to attract some employees from Uzbekistan and other CIS countries to our activities. This is why we may have expenses and income in different currencies,” Pliushcheva said, emphasizing that her approach will allow her to “competently plan and minimize transaction costs, as well as decide on the currency for storing the company’s savings.”
