
handle: 10419/101635
The paper derives optimal cross hedging and production rules for an exporting firm which faces multiple exchange rate risks. We study the impact of currency cross hedging upon the firm's export production for two countries. We demonstrate that when the forward market for cross hedging is unbiased there is a full hedge. However, the profits remain stochastic. The cross hedge reduces uncertainty about the producer's income except that part which is unhedgeable. Furthermore we show that introducing an unbiased forward market for a crosscurrency hedging will not affect the firm's total production level, even though it will increase the export to one of the two countries. This is in contrast to the usual impact which unbiased forward market has upon the risk-averse firm's production.
exports,cross hedging,forward markets, ddc:330, forward markets, F21, cross hedging, exports, F31, jel: jel:F31, jel: jel:F21
exports,cross hedging,forward markets, ddc:330, forward markets, F21, cross hedging, exports, F31, jel: jel:F31, jel: jel:F21
| selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 0 | |
| popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Average | |
| influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Average | |
| impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Average |
