Can hedging insulate firms from exchange rate risk
If exchange rate risk were a major impediment to trade, a currency union with one or more of our trading partners could facilitate trade with those partners. However, it is often suggested that exchange rate risk should not impede trade, because firms can manage the effect of exchange rate fluctuations by hedging. In this article, we examine whether hedging really can eliminate exchange rate risk.
Volume (Year): 63 (2000)
Issue (Month): (March)
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- Carrick Lucas & Lauren Rosborough, 1999. "The foreign exchange market and derivatives activity," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 62, March.
- Shang-Jin Wei, 1998.
"Currency Hedging and Goods Trade,"
NBER Working Papers
6742, National Bureau of Economic Research, Inc.
- Yuong Ha & Michael Reddell, 1998. "What do forward interest and exchange rates tell us?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, June.
- McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
- Agathe Cote, . "Exchange Rate Volatility and Trade: A Survey," Staff Working Papers 94-5, Bank of Canada.
- Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
- David Hargreaves & C John McDermott, 1999. "Issues relating to optimal currency areas: theory and implications for New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 62, September.
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