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The Foreign Exchange Exposure of Domestic Companies in Eurozone: Case of the Baltic States

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  • Ramona Rupeika-Apoga
  • Roberts Nedovis

Abstract

In this paper we are looking for answers: are domestic companies operating in small market economies such as the Baltics with little or no direct foreign involvement also at risk, taking into account that our companies mainly as a mean of exchange are using euro. The aim of this study is to examine the foreign exchange rate exposure of domestic corporations in the Baltic States. The study shows that companies in the Baltic States tend not to manage their foreign exchange risk properly and some of the companies are thus exposed to significant losses due to fluctuations in currency exchange rates. The VaR estimates are proposed and evaluated as a method to measure the position that is necessary to hedge.

Suggested Citation

  • Ramona Rupeika-Apoga & Roberts Nedovis, 2016. "The Foreign Exchange Exposure of Domestic Companies in Eurozone: Case of the Baltic States," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 165-178.
    • Handle: RePEc:ers:journl:v:xix:y:2016:i:1:p:165-178
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    References listed on IDEAS

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    Cited by:

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    2. Ramona Rupeika-Apoga & Stefan Wendt, 2021. "FinTech in Latvia: Status Quo, Current Developments, and Challenges Ahead," Risks, MDPI, vol. 9(10), pages 1-23, October.
    3. Syeda Hina Zaidi & Ramona Rupeika-Apoga, 2021. "Liquidity Synchronization, Its Determinants and Outcomes under Economic Growth Volatility: Evidence from Emerging Asian Economies," Risks, MDPI, vol. 9(2), pages 1-20, February.
    4. Margarita Dunska & Aija Marcinkevica, 2017. "Situation and Development Opportunities of Creative Industries Companies in Latvia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 96-114.
    5. S.S. Morkovina & V.V. Malitskaya & E.A. Panyavina & I.V. Sibiryatkina, 2018. "Export Potential and Measures to Support Small and Medium-Sized Enterprises," European Research Studies Journal, European Research Studies Journal, vol. 0(Special1), pages 303-314.
    6. Elena V. Dmitrishina & Denis A. Uskov & Vita A. Yagovkina & Anna A. Mikhaylova, 2018. "Peculiarities of Financial Provision for the Implementation of State Programs with Scientific and Technical Components," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 614-623.
    7. repec:ers:journl:v:special_issue:y:2018:i:1:p:303-314 is not listed on IDEAS
    8. Irina Japparova & Ramona Rupeika-Apoga, 2017. "Banking Business Models of the Digital Future: The Case of Latvia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 846-860.
    9. Waluyo, 2018. "Do Efficiency of Taxes, Profitability and Size of Companies affect Debt? A Study of Companies Listed in the Indonesian Stock Exchange," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 331-339.

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    More about this item

    Keywords

    Foreign exchange risk; risk measuring and exposure; VaR methods; non-financial companies;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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