Economics at your fingertips  

Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia

Adolfo Barajas, Sergio Restrepo-Ángel, Roberto Steiner (), Juan Medellín () and Cesar Pabon

No 2017/263, IMF Working Papers from International Monetary Fund

Abstract: After building up foreign currency denominated (FC) liabilities over several years, Colombian firms might be vulnerable to a shift in external conditions. We undertake three empirical exercises to better understand these vulnerabilities. First, we identify the determinants of FC borrowing. Second, we investigate the implications for real activity, finding a balance sheet effect that transmits exchange rate fluctuations to investment and is asymmetric, much stronger for depreciations than for appreciations. Finally, we find that foreign exchange derivatives are not used solely for hedging, due in part to monetary authority intervention to smooth exchange rate volatility. However, a full explanation remains open for future research.

Keywords: WP; FC debt; foreign currency; exchange rate; trade credit; Colombia; depreciation; balance sheet effects; exchange rate derivatives; balance sheet exposure; FC assets; debt issuance; Financial statements; Hedging; Exports; Exchange rates; Global (search for similar items in EconPapers)
Pages: 41
Date: 2017-11-22
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().

Page updated 2024-07-17
Handle: RePEc:imf:imfwpa:2017/263