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Effect of Foreign Exchange Interventions on Corporate Hedging Activities: Evidence from Indian Firms

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  • Ekta Sikarwar

    (Indian Institute of Management Kozhikode)

Abstract

: This study investigates the effect of foreign exchange interventions on corporate hedging. Using a sample of 419 Indian firms over the period 2001-2019, the results report that firms leave their exposure unhedged or partly hedged in response to high forex intervention. This indicates that firms consider interventions as a guarantee against sharp exchange rate fluctuations. Additionally, the effects of positive and negative interventions on hedging are asymmetric and, vary for importers and exporters. These findings offer important insights and implications for firm managers as well as policy makers.

Suggested Citation

  • Ekta Sikarwar, 2022. "Effect of Foreign Exchange Interventions on Corporate Hedging Activities: Evidence from Indian Firms," Working papers 503, Indian Institute of Management Kozhikode.
    • Handle: RePEc:iik:wpaper:503
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