Export and benefits of hedging in emerging economies

Udo Broll, Jack E. Wahl and Christoph Wessel

No 10/09, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: We study the impact of exchange rate risk upon export production within an emerging economy lacking in currency forward markets. However there exists a financial asset whose price is correlated with the relevant foreign currency. We present conditions under which export production is stimulated when the hedging device becomes more effective. In any case the exporting firm benefits from imperfectly hedging exchange rate risk.

Keywords: Emerging markets; transition economy; export; exchange rate risk; price risk; hedging (search for similar items in EconPapers)
JEL-codes: D80 D81 F14 F31 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuddps:1009

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