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Insights Into Central And Eastern European Countries Competitiveness: On The Exposure Of Capital Markets To Exchange Rate Risk


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  • Alexandra HOROBET

    (Academy of Economic Studies, Bucharest)


    (Academy of Economic Studies, Bucharest)

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    Unexpected fluctuations in exchange rates represent a matter of concern for all businesses nowadays as the volatility in exchange rates impacts businesses’ cash flows, revenues and expenses, and eventually is reflected in the company’s risk-return profile. Companies’ exposures to exchange rate risk have considerably increased in the past decades, given the boost in international operations and the continuous diversification of businesses’ activities at the global level. Despite the attention that businesses display to nominal exchange rates changes, it is the real exchange rate that should be of more concern to corporate managers, since they induce changes at the level of the competitiveness of the business. Our paper comparatively analyzes the exposure to changes in the nominal and real exchanges rates of the local currencies that companies from a number of four Central and Eastern European countries (Romania, Hungary, Czech Republic and Poland) and investigates the nature of the relationship between stock market performance and exchange rates in the four countries under consideration. We find limited evidence for contemporaneous and asymmetric exposure to nominal and real exchange rate risk in all four countries, but consistent evidence for three to four months lagged exposure.

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    Bibliographic Info

    Article provided by Alexandru Ioan Cuza University, Faculty of Economics and Business Administration in its journal Review of Economic and Business Studies.

    Volume (Year): (2008)
    Issue (Month): 2 (November)
    Pages: 107-125

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    Handle: RePEc:aic:revebs:y:2008:i:2:horobeta

    Contact details of provider:
    Postal: Universitatea Al. I. Cuza; B-dul Carol I nr. 22; Iasi
    Phone: 004 0232 201070
    Fax: 004 0232 217000
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    Related research

    Keywords: exposure; exchange rate risk; nominal exchange rate; real exchange rate;

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    Cited by:
    1. Christos Nikas & Student Anastasia Blouchoutzi, 2014. "Emigrants’ Remittances and the “Dutch Disease” in Small Transition Economies: the Case Of Albania and Moldova," Romanian Statistical Review, Romanian Statistical Review, vol. 62(1), pages 45-65, March.
    2. Alexandra HOROBET & Livia ILIE, 2009. "On The Exchange Rate Risk Contribution To The Performance Of International Investments: The Case Of Romania," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 3, pages 57-83, May.


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