Abstract: This literature review explores the impact of exchange rate (FX) volatility on the cash flows of non-financial firms within the MENA region, a subject of growing importance due to the region’s economic openness, reliance on oil exports, and widespread currency pegs to the US dollar. The purpose of this study is to synthesize and critically assess prior research to understand the financial vulnerabilities and risk management practices of MENA firms exposed to foreign currency fluctuations. Drawing upon a wide range of peer-reviewed empirical and conceptual studies published between 2000 and 2025, including some theories from 1970, this review integrates evidence from global and regional contexts, with particular attention to the effects of the COVID-19 pandemic on FX exposure. A narrative literature review (NLR) methodology was employed, utilizing thematic analysis to extract and compare findings across diverse sources, while evaluating methodological strengths and gaps in the existing body of work. The findings highlight the high sensitivity of MENA non-financial firms’ cash flows to exchange rate movements, limited hedging practices, and structural constraints such as shallow derivative markets. The review concludes with recommendations for enhanced financial disclosure, derivative market development, and FX policy reform, alongside a call for more firm-level, post-pandemic empirical research in the region.

Keywords: Exchange Rate Volatility, Cash Flows, MENA Region, Non-Financial Firms, Foreign Exchange Risk, COVID-19

Pages: 2198-2213