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Hedging Behaviour of Czech Exporting Firms

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Author Info

  • Vlastimil Cadek
  • Helena Rottova
  • Branislav Saxa

Abstract

The hedging behaviour of Czech exporting firms is analysed using questionnaire information and interviews with banks. Approximately 60% of the 184 firms surveyed hedge their FX exposures, and about 88% of their exports are hedged. Most exporters use natural hedging, i.e. they balance incoming and outgoing payments in foreign currency as well as foreign currency assets and liabilities. Hedgers on financial markets prefer forwards and zero-cost option structures, as they are reluctant to pay option premiums. The typical maturity of financial instruments is three months to one year. More than one half of exporters hedge consistently, while around 60% hedge actively, taking advantage of currency moves. Our simple model of hedging behaviour for example suggests that trading within a group reduces the need for hedging.

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Bibliographic Info

Paper provided by Czech National Bank, Research Department in its series Working Papers with number 2011/14.

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Date of creation: Dec 2011
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Handle: RePEc:cnb:wpaper:2011/14

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Keywords: Exchange rate exposure; exchange rate risk; exports; hedging behaviour.;

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  1. Jan Babecky & Kamil Dybczak & Kamil Galuscak, 2008. "Survey on Wage and Price Formation of Czech Firms," Working Papers 2008/12, Czech National Bank, Research Department.
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Cited by:
  1. Peter Toth, 2013. "Currency Shocks to Export Sales of Importers: A Heterogeneous Firms Model and Czech Micro Estimates," Working Papers 2013/04, Czech National Bank, Research Department.

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