A directional evaluation of corporate executives' exchange rate forecasts

Yoichi Tsuchiya

Applied Economics, 2014, vol. 46, issue 1, 95-101

Abstract: We investigate the directional accuracy of exchange rate forecasts by corporate executives. We find that a forecast with a 1-year horizon is valuable for the profitability and unprofitability predictions of manufacturers, although previous studies provide considerable evidence that forecasts with horizons of 1 year and longer are not valuable. However, a forecast is not valuable in predicting an appreciation or depreciation of the exchange rate. Our findings suggest that corporate executives are more concerned about and focused on the impact of the exchange rate on their profitability, rather than the exchange rate itself.

Date: 2014
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DOI: 10.1080/00036846.2013.831173

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