Foreign currency invoicing of domestic transactions as a hedging strategy: evidence for Uruguay
| Autor: | Miguel Mello, Gerardo Licandro |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2019 |
| Předmět: |
050208 finance
05 social sciences exchange rate risk Monetary economics lcsh:HD72-88 currency invoicing lcsh:Economic growth development planning lcsh:Economic history and conditions Us dollar Currency 0502 economics and business dollarization Economics lcsh:HC10-1085 050207 economics Foreign exchange risk hedging General Economics Econometrics and Finance |
| Zdroj: | Journal of Applied Economics, Vol 22, Iss 1, Pp 622-634 (2019) |
| ISSN: | 1667-6726 1514-0326 |
| Popis: | This study is an empirical analysis of the factors associated with the use of the US dollar for the invoicing of domestic transactions, which is a common practice of Uruguayan firms. Using a novel dataset we find that both the input and debt structure of firms are relevant for determining their currency of invoicing. Intuitively, firms will generate cash flows in US dollar if they have to make expenditures in foreign currency, either because they use imported inputs or if they cover debt services with currency risk. This practice can be seen as a hedging strategy to mitigate exchange risk in a highly dollarized economy. We empirically show that firms use their flows position to hedge currency mismatches in their stocks; domestic invoicing in US dollar is correlated with large negative financial positions, and the share of imported inputs and of exports. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|
| Nepřihlášeným uživatelům se plný text nezobrazuje | K zobrazení výsledku je třeba se přihlásit. |