Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)

Abstract: This paper investigates the effect of exchange rate fluctuation on a firm’s value, the so-called exchange rate exposure, for a sample of Swedish firms. In contrast to previous results, using U.S. data, the values of Swedish firms, as reflected in the stock price, seem quite sensitive to movements in the exchange rate. Studying the cross sectional differences in exposure, the estimated exposure is positively and significantly related to the fractional of total sales made broad and negatively related to the use of currency derivatives.

Keywords: Exchange rate exposure; Foreign activities; Hedging

JEL-codes: F30; G10

35 pages, May 1, 1999

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Published as

Stefan Nydahl, (1999), 'Exchange Rate Exposure, Foreign Involvement and Currency Hedging of Firms - Some Swedish Evidence', European Financial Management, vol 5, no 2, pages 241-257

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