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Strategic foreign exchange management

Author

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  • Thomas VON UNGERN-STERNBERG
  • C.C. VON WEIZSAECKER

Abstract

This paper argues that it is possible to advise firms on how to hedge against foreign exchange risks only if one has detailed knowledge of the competitive environment they work in. To illustrate this, the authors compare firms' hedging requirements in a number of different standard industrial organizations models, in particular the Cournot model, a model with conjectural variations, price taking firms, and monopolistic competition. Copyright 1990 by Blackwell Publishing Ltd.
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Suggested Citation

  • Thomas VON UNGERN-STERNBERG & C.C. VON WEIZSAECKER, 1989. "Strategic foreign exchange management," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 8905, Université de Lausanne, Faculté des HEC, DEEP.
  • Handle: RePEc:lau:crdeep:8905
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    Citations

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    Cited by:

    1. Goswami, Gautam & Shrikhande, Milind M., 2001. "Economic exposure and debt financing choice," Journal of Multinational Financial Management, Elsevier, vol. 11(1), pages 39-58, February.
    2. Nucci, F. & Pozzolo, A.F., 1998. "Investment and the Exchange Rate," Papers 344, Banca Italia - Servizio di Studi.
    3. Campa, Jose & Goldberg, Linda S., 1995. "Investment in manufacturing, exchange rates and external exposure," Journal of International Economics, Elsevier, pages 297-320.
    4. Gordon M. Bodnar & Bernard Dumas & Richard C. Marston, 2002. "Pass-through and Exposure," Journal of Finance, American Finance Association, vol. 57(1), pages 199-231, February.
    5. Martin, Anna D. & Mauer, Laurence J., 2003. "Transaction versus economic exposure: which has greater cash flow consequences?," International Review of Economics & Finance, Elsevier, vol. 12(4), pages 437-449.
    6. Matthias Pelster, 2015. "Marketable and non-hedgeable risk in a duopoly framework with hedging," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(4), pages 697-716, October.
    7. Udo Broll & Jack E. Wahl & Christoph Wessel, 2011. "Export, Exchange Rate Risk and Hedging: The Duopoly Case," German Economic Review, Verein für Socialpolitik, vol. 12(4), pages 490-502, November.
    8. Hommel, Ulrich, 2003. "Financial versus operative hedging of currency risk," Global Finance Journal, Elsevier, vol. 14(1), pages 1-18, May.
    9. Martin, Anna D. & Mauer, Laurence J., 2004. "Scale economies in hedging foreign exchange cash flow exposures," Global Finance Journal, Elsevier, vol. 15(1), pages 17-27.
    10. Muller, Aline & Verschoor, Willem F.C., 2009. "The effect of exchange rate variability on US shareholder wealth," Journal of Banking & Finance, Elsevier, vol. 33(11), pages 1963-1972, November.
    11. Muller, Aline & Verschoor, Willem F.C., 2006. "Foreign exchange risk exposure: Survey and suggestions," Journal of Multinational Financial Management, Elsevier, vol. 16(4), pages 385-410, October.
    12. Broll, Udo & Wahl, Jack E. & Wessel, Christoph, 2008. "Export production, hedging exchange rate risk: the duopoly case," Dresden Discussion Paper Series in Economics 06/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    13. Floden, Martin & Simbanegavi, Witness & Wilander, Fredrik, 2008. "When is a lower exchange rate pass-through associated with greater exchange rate exposure," Journal of International Money and Finance, Elsevier, vol. 27(1), pages 124-139, February.
    14. Bartram, Söhnke M. & Brown, Gregory W. & Minton, Bernadette A., 2010. "Resolving the exposure puzzle: The many facets of exchange rate exposure," Journal of Financial Economics, Elsevier, vol. 95(2), pages 148-173, February.
    15. Bodnar, Gordan M. & Marston, Richard C., 2000. "A Simple Model of Foreign Exchange Exposure," Working Papers 00-3, University of Pennsylvania, Wharton School, Weiss Center.
    16. Nucci, Francesco & Pozzolo, Alberto F., 2001. "Investment and the exchange rate: An analysis with firm-level panel data," European Economic Review, Elsevier, vol. 45(2), pages 259-283, February.
    17. repec:dau:papers:123456789/15237 is not listed on IDEAS
    18. Marston, Richard C., 2001. "The effects of industry structure on economic exposure," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 149-164, April.

    More about this item

    Keywords

    enterprises; risk; competition; monopolies; exchange rate;

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