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Exchange rate exposure and the use of foreign currency derivatives in the Australian resources sector

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  • Yip, Wing Hung
  • Nguyen, Hoa
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    Abstract

    In this paper, we provide a re-examination of the exchange rate exposure and foreign currency derivative use by Australian resources firms in the 2006–2009 period which is characterized by increased volatility caused by the global financial crisis. In particular, we consider the interaction of a resources firm's exchange rate risk exposures, foreign currency derivative use and the global financial crisis simultaneously. Conforming to expectations, our results indicate that more companies are significantly exposed to exchange rate risk since the onset of the financial crisis. However, there is a lack of evidence that the use of foreign currency derivative is more effective in alleviating exchange rate exposures during the crisis as opposed to the pre-crisis period.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Multinational Financial Management.

    Volume (Year): 22 (2012)
    Issue (Month): 4 ()
    Pages: 151-167

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    Handle: RePEc:eee:mulfin:v:22:y:2012:i:4:p:151-167

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    Web page: http://www.elsevier.com/locate/mulfin

    Related research

    Keywords: Exchange rate exposure; Foreign currency derivatives; Australian resources firms; Global financial crisis;

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    Cited by:
    1. Monika Walicka, 2013. "Consequences of access to euro zone from entrepreneurs’ attitude," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 12(4), pages 589-600, December.

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