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Considerations Upon The Selection Of Currency Hedging Strategies – Between Oportunity And Applicability

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  • Ioan Ovidiu SPATACEAN

    (Universitatea “Petru Maior” din Tîrgu–Mures Str. Nicolae Iorga, nr.1, Tîrgu – Mures, MURES, 540088, România)

  • Paula NISTOR

    (Universitatea “Petru Maior” din Tîrgu–Mures Str. Nicolae Iorga, nr.1, Tîrgu – Mures, MURES, 540088, România)

Abstract

In conditions of high exchange rate volatility, entities conducting foreign trade transactions are subject to currency risk exposures, which may have a significant impact on financial performance and operating profitability. The research approach is oriented to identify the possibility to implement viable strategies for currency hedging, as an essential component of risk management operations for entities holding assets or liabilities denominated in a currency. Research methodology is based on the analysis of derivative transactions (futures contracts), carried on Monetary Financial and Commodities Exchange of Sibiu (Sibex), for the purpose of defining viable strategies to hedge currency risk. As an alternative to the domestic financial derivatives’ market, in order to overcome certain deficiencies relating to the liquidity of financial instruments, it was also examined the Forex market, to test the opportunity of receiving protection against currency risks.

Suggested Citation

  • Ioan Ovidiu SPATACEAN & Paula NISTOR, 2009. "Considerations Upon The Selection Of Currency Hedging Strategies – Between Oportunity And Applicability," STUDIA UNIVERSITATIS PETRU MAIOR SERIES OECONOMICA, Petru Maior University, Faculty of Economics Law and Administrative Sciences, vol. 1, pages 57-78, December.
    • Handle: RePEc:pmu:oecono:v:1/2009:y:2009:p:57-78
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    More about this item

    Keywords

    risk management; financial derivatives; volatility; hedging strategies;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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