Cross-currency hedging as an alternative to forward and money market hedging in an emerging financial market

Moosa, I 2006, 'Cross-currency hedging as an alternative to forward and money market hedging in an emerging financial market', International Economics and Finance Journal, vol. 1, no. 1, pp. 95-105.


Document type: Journal Article
Collection: Journal Articles

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Title Cross-currency hedging as an alternative to forward and money market hedging in an emerging financial market
Author(s) Moosa, I
Year 2006
Journal name International Economics and Finance Journal
Volume number 1
Issue number 1
Start page 95
End page 105
Total pages 11
Publisher Serials Publications
Abstract This study examines the effectiveness of cross-currency hedging compared to that of forward hedging and money market hedging, using the Kuwaiti dinar as a base currency. It demonstrates that cross-currency hedging is not effective because the exchange rate arrangement produces low exchange rate correlations. A policy recommendation based on the findings is that the hedging function can benefit enormously from the existence of sophisticated financial markets.
Subject Investment and Risk Management
Keyword(s) Cross Hedging
Correlation
Foreign Exchange Exposure
Copyright notice © 2006 Serials Publications
ISSN 0973-5259
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