Exchange Rate Exposure, Foreign Currency Derivatives and the Introduction of the Euro: French Evidence

31 Pages Posted: 7 Feb 2004

See all articles by Hoa Nguyen

Hoa Nguyen

University of South Australia - School of Commerce

Robert W. Faff

University of Queensland

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Abstract

In this paper, we investigative the impact of the introduction of the Euro on exchange rate exposures and the subsequent hedging practices of a sample of French corporations. Our findings indicate that the introduction of the Euro led to both a reduction in the number of firms that have significant exchange rate exposure and the absolute size of exposure. In response to these reduced exposures, French firms tend to use foreign currency derivatives less intensively although there has been no change in the number of firms that make use of the instruments. Furthermore, the use of foreign currency derivatives is found to be effective in managing exchange rate exposure but there is insufficient evidence that these instruments are more effective in post Euro periods.

Suggested Citation

Nguyen, Hoa and Faff, Robert W. and Marshall, Andrew P., Exchange Rate Exposure, Foreign Currency Derivatives and the Introduction of the Euro: French Evidence. Available at SSRN: https://ssrn.com/abstract=499462 or http://dx.doi.org/10.2139/ssrn.499462

Hoa Nguyen (Contact Author)

University of South Australia - School of Commerce ( email )

37-44 North Terrace
Adelaide SA 5000, South Australia 5001
Australia
61 8 8302 0675 (Phone)
61 8 8302 0512 (Fax)

Robert W. Faff

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

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