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Exchange rate exposure of agricultural cooperatives

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  • Pedro Piccoli

Abstract

Despite the growth of exchange risk literature in the field of agricultural economics, little attention has been paid to firm‐level currency exposure in emerging countries. In this context, this paper investigates the exchange rate exposure faced by a unique data set of 66 Brazilian agricultural cooperatives from 2000 to 2015, and finds that around one‐third of the sampled firms exhibited significant exposure during this period, even after controlling for crises. The paper also documents that the proportion of exposed firms doubles during periods in which the local central bank intervenes more in the currency regime, lending support to the moral hazard hypothesis: when the exchange rate is less flexible, local companies tend to adopt unhedged positions in response to implicit government guarantees. Finally, firms with more debt, better asset management, lower inventory levels, and higher product differentiation tend to be less exposed to currency swings [EconLit Citations: F31, G15, G23].

Suggested Citation

  • Pedro Piccoli, 2020. "Exchange rate exposure of agricultural cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 36(1), pages 94-110, January.
    • Handle: RePEc:wly:agribz:v:36:y:2020:i:1:p:94-110
    DOI: 10.1002/agr.21629
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    References listed on IDEAS

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    1. Barry Eichengreen & Ricardo Hausmann, 1999. "Exchange rates and financial fragility," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368.
    2. Keith E. Maskus, 1986. "Exchange rate risk and U.S. trade: a sectoral analysis," Economic Review, Federal Reserve Bank of Kansas City, vol. 71(Mar), pages 16-28.
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    Cited by:

    1. Zakiya Begum Sayed & J. Gayathri, 2023. "Factors Determining the Exchange Rate Exposure of Firms: Evidence from India," Business Perspectives and Research, , vol. 11(2), pages 210-226, May.

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