Study on the Foreign Exchange Risk Management of Taiwanese Enterprises

• Main Authors: Kuo-Yu Chen, 陳國裕
• Other Authors: Chung-Da Ho
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/y7jvv5

碩士 === 國立中央大學 === 財務金融學系碩士在職專班 === 94 === Abstract: Due to the effect of increasingly liberalized international finance market, it causes more violent fluctuation on each nation’s exchange rate, and exchange rate has become one of the very important factors which influence a nation’s economy, and Meanwhile enterprise value is also deeply influenced by the fluctuations of exchange rate. Therefore, how to effectively control the financial operation in order to avoid "foreign exchange risk" has turned to be a very important task of finance staffs in Taiwanese enterprises. The study uses the enterprise customers of International Commercial Bank of China as the questionnaire subject, to analyze the sample and realize the manners and attitudes of Taiwanese enterprises on coping with exchange rate risk, their risk management strategies, and the current application status of their financial derivatives. Study results are as below: 1. People engaging in exchange rate risk management often overestimates their abilities on exchange rate forecast, and therefore affect their attitudes toward risk management. 2. Full hedging and constant proportion hedging would provide better performance on exchange rate risk management. 3. Decision making performed by professional risk management institutions can adopt better strategy to achieve the goal of risk management. 4. There is positive correlation between the period lengths of hedging contract and hedging outcomes, longer hedging contract period is less influenced by the exchange rate fluctuation. But in practice, most of the hedging contract periods of Taiwanese enterprises are less than 6 months; this result is similar to the American investigation result. 5. Investigation result shows that the major hedging tool of exchange rate is Currency Forward Contracts, other exchange rate hedging tools such as Currency Options or Currency Futures etc. are not popular yet.