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

Hoa Nguyen, Robert Faff*, Andrew Marshall

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

20 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)563-577
Number of pages15
JournalInternational Review of Economics and Finance
Volume16
Issue number4
DOIs
Publication statusPublished - 2007
Externally publishedYes

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