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Exchange rate exposure, foreign currency derivatives and the introduction of the euro: French evidence

journal contribution
posted on 2007-01-01, 00:00 authored by Hoa NguyenHoa Nguyen, R Faff, A Marshall
We investigate the impact of the introduction of the Euro on exchange rate exposures for French corporations and examine the corporate use of foreign currency derivatives to hedge exchange rate exposure post-Euro. Our findings indicate that the introduction of the Euro is associated with both a reduction in the number of firms that have significant exchange rate exposure and the absolute size of exposure. Consistent with these reduced exposures, French firms use foreign currency derivatives less intensively. Furthermore, the use of foreign currency derivatives is found to be associated with lower exchange rate exposure but there is insufficient evidence that these instruments are more effective in the post-Euro environment.

History

Journal

International review of economics & finance

Volume

16

Issue

4

Pagination

563 - 577

Publisher

Elsevier BV

Location

Amsterdam, Netherlands

ISSN

1059-0560

eISSN

1873-8036

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2006, Elselvier Inc.