Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 177: Hedging and Managing Exchange Rate and Related Macroeconomic Exposure

Lars Oxelheim () and Clas G. Wihlborg
Additional contact information
Lars Oxelheim: Research Institute of Industrial Economics (IFN)
Clas G. Wihlborg: University of Southern California

Abstract: Hedging transaction and translation exposures to exchange rate changes may increase the economic exposure of the firm and reduce the information value of firms' quarterly statements. In this paper hedging macroeconomic exposures, of which exchange rate exposure is one type, is discussed in terms of choice of macroeconomic variables for which exposures could be measured, choice of strategy for managing exposures, and choice of financial instruments for hedging different exposures.

Keywords: Hedging; macroeconomic schocks firm strategy; financial instruments

JEL-codes: G10; G32

46 pages, August 1987

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