Firms, Do You Know Your Currency Risk Exposure? Survey Results
42 Pages Posted: 24 Jan 2000
Date Written: January 5, 2000
This paper surveys the currency risk management practices of Swiss industrial corporations. We find that industrials do not quantify their currency risk exposure and investigate possible reasons. One possibility is that firms do not think they need to know because they use on-balance-sheet instruments to protect themselves before and after currency rates reach troublesome levels. This is puzzling because a rough estimate of at least cash flow exposure is not a prohibitive task and could be helpful. It is also puzzling that firms use currency derivatives to hedge/insure individual short-term transactions, without apparently trying to estimate aggregate transaction exposure.
JEL Classification: G15, G30, G32
Suggested Citation: Suggested Citation