by Laura Alfaro, Mauricio Calani, and Liliana Varela
Economies with less liquid foreign exchange derivative markets offer firms fewer options to hedge their currency risk. Given the limitations of natural hedging, these firms are more exposed to systemic risk.
Currency Hedging in Emerging Markets: Managing Cash Flow Exposure
Economies with less liquid foreign exchange derivative markets offer firms fewer options to hedge their currency risk. Given the limitations of natural hedging, these firms are more exposed to systemic risk.