Indirect hedging of exchange rate risk

Udo Broll; Jack E. Wahl; Itzhak Zilcha

doi:10.1016/0261-5606(95)00019-B

Indirect hedging of exchange rate risk

Udo Broll^*, Jack E. Wahl, Itzhak Zilcha

^*Corresponding author for this work

School of Economics

Research output: Contribution to journal › Article › peer-review

38 Scopus citations

Abstract

The purpose of this study is to investigate the impact of exchange rate risk upon export production when the firm cannot engage in a direct forward hedge in the exchange rate. However, there exists a forward market for a domestic financial asset correlated with the exchange rate in question. Exporting firms using such an indirect hedging device to reduce foreign exchange risk do not necessarily increase their output when such unbiased hedging market becomes available. This contrasts with the well-known result in the case of direct hedging.

Original language	English
Pages (from-to)	667-678
Number of pages	12
Journal	Journal of International Money and Finance
Volume	14
Issue number	5
DOIs	https://doi.org/10.1016/0261-5606(95)00019-B
State	Published - Oct 1995

Access to Document

10.1016/0261-5606(95)00019-B

Cite this

@article{1ad869b0c8944463847336b305803ea3,

title = "Indirect hedging of exchange rate risk",

abstract = "The purpose of this study is to investigate the impact of exchange rate risk upon export production when the firm cannot engage in a direct forward hedge in the exchange rate. However, there exists a forward market for a domestic financial asset correlated with the exchange rate in question. Exporting firms using such an indirect hedging device to reduce foreign exchange risk do not necessarily increase their output when such unbiased hedging market becomes available. This contrasts with the well-known result in the case of direct hedging.",

author = "Udo Broll and Wahl, {Jack E.} and Itzhak Zilcha",

year = "1995",

month = oct,

doi = "10.1016/0261-5606(95)00019-B",

language = "אנגלית",

volume = "14",

pages = "667--678",

journal = "Journal of International Money and Finance",

issn = "0261-5606",

publisher = "Elsevier BV",

number = "5",

}

TY - JOUR

T1 - Indirect hedging of exchange rate risk

AU - Broll, Udo

AU - Wahl, Jack E.

AU - Zilcha, Itzhak

PY - 1995/10

Y1 - 1995/10

N2 - The purpose of this study is to investigate the impact of exchange rate risk upon export production when the firm cannot engage in a direct forward hedge in the exchange rate. However, there exists a forward market for a domestic financial asset correlated with the exchange rate in question. Exporting firms using such an indirect hedging device to reduce foreign exchange risk do not necessarily increase their output when such unbiased hedging market becomes available. This contrasts with the well-known result in the case of direct hedging.

AB - The purpose of this study is to investigate the impact of exchange rate risk upon export production when the firm cannot engage in a direct forward hedge in the exchange rate. However, there exists a forward market for a domestic financial asset correlated with the exchange rate in question. Exporting firms using such an indirect hedging device to reduce foreign exchange risk do not necessarily increase their output when such unbiased hedging market becomes available. This contrasts with the well-known result in the case of direct hedging.

UR - http://www.scopus.com/inward/record.url?scp=0000613589&partnerID=8YFLogxK

U2 - 10.1016/0261-5606(95)00019-B

DO - 10.1016/0261-5606(95)00019-B

M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???

AN - SCOPUS:0000613589

SN - 0261-5606

VL - 14

SP - 667

EP - 678

JO - Journal of International Money and Finance

JF - Journal of International Money and Finance

IS - 5

ER -

Indirect hedging of exchange rate risk

Abstract

Access to Document

Other files and links

Fingerprint

Cite this