Exchange rate exposure and the use of foreign currency derivatives in the Australian resources sector

2012 ◽  
Vol 22 (4) ◽  
pp. 151-167 ◽  
Author(s):  
Wing Hung Yip ◽  
Hoa Nguyen
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Exposure ◽  
Currency Derivatives

Foreign Currency Derivatives and Foreign Exchange Rate Exposure Management of KOSDAQ Firms

2013 ◽  
Vol 21 (2) ◽  
pp. 223-254
Author(s):  
Taek Ho Kwon
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Foreign Currency ◽  
Foreign Exchange Rate ◽  
Sufficient Evidence ◽  
Similar Data ◽  
Test Results ◽  
Crisis Period ◽  
Exchange Rate Exposure ◽  
Currency Derivatives

This study examines the foreign currency derivatives trading of KOSDAQ firms and analyses the relations of derivatives trading and foreign exchange rate exposure in the period 2005~2010. The amount of derivatives trading reaches 27.7% of total assets for the trading firms before global financial crisis period (2005~2007). While, the amount decreases to 17.6% of total assets during the crisis period (2008~2010). These amounts are much greater than those of KOSPI firms which are calculated using similar data specification and periods. The variables which are usually adopted as determinants of derivatives trading do not explain the usage of derivatives in the analysis of period 2005~2007. These results suggest that KOSDAQ firms use derivatives not only foreign exchange risk managements but also trading purposes during this period. Test results do not show sufficient evidence that KOSDAQ firms use derivatives trading in an effective manner to manage foreign exchange rate exposure. In sum, test results suggest that to achieve the goal of managing foreign exchange rate exposure firms should estimate their open position in foreign currency properly before conducting foreign currency derivatives trading.

scholarly journals Foreign Currency Exposure and Hedging: Evidence from Foreign Acquisitions

2013 ◽  
Vol 03 (02) ◽  
pp. 1350010 ◽  
Author(s):  
Söhnke M. Bartram ◽  
Natasha Burns ◽  
Jean Helwege
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Securities And Exchange Commission ◽  
Foreign Companies ◽  
Foreign Acquisitions ◽  
Currency Derivatives ◽  
Currency Exposure ◽  
Foreign Operations ◽  
The Exchange Rate ◽  
Using Data

We study the exchange rate exposures of a sample of firms that undertake large acquisitions of foreign companies. Using data from Securities and Exchange Commission (SEC) filings on their foreign operations and derivatives usage, we examine how the exposures change from before to after the acquisition. We find that these deals generally lead to reduced currency exposure, which reflects the fact that most of the firms already have business in the target's country and the mergers serve as operational hedges. In contrast, we do not find a statistically significant effect for hedging with currency derivatives despite the fact that many of the firms in the sample use such instruments.

Exchange rate fluctuations and firm value: impact of global financial crisis

2018 ◽  
Vol 45 (6) ◽  
pp. 1145-1158 ◽  
Author(s):  
Ekta Sikarwar
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Firm Value ◽  
Global Financial Crisis ◽  
Dynamic Environment ◽  
External Shocks ◽  
Content Type ◽  
Crisis Period ◽  
Exchange Rate Exposure ◽  
Currency Derivatives

Purpose The purpose of this paper is to examine the presence of exchange rate exposure and its relationship with currency derivatives usage in the dynamic environment of the global financial crisis of 2008. Design/methodology/approach Using a sample of 624 Indian firms over the period of April 2001–March 2016, this paper investigates the linear and asymmetric exposure by dividing the full sample period into different sub-periods around the crisis. Findings The evidence presented in the paper suggests that the firms are more exposed to the exchange rate changes since the onset of the financial crisis. However, there is a lack of evidence that the usage of currency derivatives is more effective in reducing exposure during the crisis/post-crisis period as opposed to the pre-crisis period. Practical implications The findings are important to investors and managers for a better understanding of firm behaviours in relation to their risk management policies during the period of external shocks like crisis. Originality/value There is a paucity of research to explore whether the effect of currency derivatives usage on exchange rate exposure varies during external shocks such as crisis periods. The paper provides novel evidence that the effectiveness of derivatives usage in alleviating exposure becomes less during the dynamic environment of crisis.

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