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The Management of Foreign Exchange Exposures

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Bank Stability, Sovereign Debt and Derivatives

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Abstract

Since 1986, the international foreign exchange market has grown from US$208 billion in daily turnover (including spot, outright forward and foreign exchange swap transaction) to US$3.9 trillion in 2008 (Bank for International Settlement, 2010). The FDI1 activity of mainly multinational companies (MNC) grew from around US$86.3 billion to around US$1.8 trillion in 2008 (UnctadStat, 2010). During the same period, international trade volumes grew from about US$2.4 million to about US$200 million (UnctadStat, 2010). These numbers demonstrate the globalization that has taken place during the last 25 years, and the increase in international activities by MNCs. This study investigates the foreign exchange exposure management of some Swedish and UK firms. The management of foreign exposure in global firms is considered today as a mature area with well established procedures and a choice of hedging techniques. This study aims at describing the development of these procedures and what factors that lie behind changes taking place. In contrast to other qualitative studies (for example, Aabo, 2006; Bartram, 2001; Brown, 2001; Dhanani, 2004 and Dhanani and Groves, 2001), we have had the opportunity of performing a longitudinal survey with repeated visits on three occasions during this period of extreme growth in the international financial markets, between 1986 and 2008.

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Author information

Authors and Affiliations

  1. Department of Business Administration, School of Business, Economics and Law, Gothenburg University, Sweden

    Göran Bergendahl (Professor Emeritus)

  2. Department of Business Administration, School of Business, Economics and Law, University of Göteborg, Sweden

    Stefan Sjögren (associate professor)

Authors
  1. Göran Bergendahl
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  2. Stefan Sjögren
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Editor information

Editors and Affiliations

  1. University of Malta, Malta

    Joseph Falzon (Faculty of Economics, Management and Accountancy) (Faculty of Economics, Management and Accountancy)

Copyright information

© 2013 Göran Bergendahl and Stefan Sjögren

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Bergendahl, G., Sjögren, S. (2013). The Management of Foreign Exchange Exposures. In: Falzon, J. (eds) Bank Stability, Sovereign Debt and Derivatives. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9781137332158_9

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