We examine the measurement and determinants of asymmetric foreign exchange exposure
with a focus on the role of firms’ usage of foreign currency-denominated debt (FCDD).
Employing a large sample of Korean firms, we find significant asymmetries in exchange exposure.
We also find that firms with dollar-denominated debt exhibit substantially lower asymmetries
in exchange exposure than firms without such debt. Most interestingly, both a firm’s
export ratio and dollar-denominated debt ratio are significantly related to its asymmetric
exposure but in the opposite direction. In contrast, a firm’s option trading has little impact
on its asymmetric exchange exposure. Consistent with the FCDD effect hypothesis, these
results provide strong evidence that increased asymmetries in exchange exposure resulting
from exporting activities can be effectively reduced by the usage of FCDD. Our results offer a
broadly applicable implication that firms with high asymmetric exchange exposure can effectively
manage their exchange risk from operating activities by selectively using exporting and
FCDD financing.

Bae, S. C., Taek Ho Kwon(2013), "Asymmetric Foreign Exchange Exposure, Option Trade, and Foreign Currency Denominated Debt: Evidence from Korea"    Asia-Pacific Journal of Financial Studies 42, 314?339.

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