The Effects of Exchange Rates Fluctuations on the Performance of a Manufacturing Concern in a Hyperinflationary Environment: A Case of Delta Beverages Zimbabwe

Abstract

This study analyzes effects of exchange rate fluctuations on the performance of manufacturing firms using Delta beverages Zimbabwe as a case study. Delta was preferred as it imports some of its raw materials and capital goods from other countries. A case study was used because it allowed the researchers to concentrate on a real scenario, thus proffering solutions to any business that may want to use the stated findings for improving a real situation. The aims of the study were to assess the effect of exchange rates fluctuations on raw material availability, to assess the relationship between exchange rates and firm performance. The study used mixed research method allowing researchers to use both primary data and secondary data. Primary data was obtained using questionnaires and secondary data was obtained from Delta's financial statements for 2017 and 2018. Results showed that that production output of Delta decreases as the currency depreciate, currency appreciation increases the production output of Delta beverages. Currency depreciation increases labor costs and leads to a fall in productivity of Delta beverages and currency appreciation reduces labor which supports the view that currency depreciation reduces the importation of machinery and equipment which will in turn slow productivity. It was found out that fluctuations of exchange rates in Zimbabwe have a significant effect on the availability of imported raw materials.