Korean companies vulnerable to foreign exchange risks due to lack of hedging options.
The article discusses how Korean companies are vulnerable to foreign exchange volatility due to low awareness and limited options for hedging risks. The researchers analyzed the currency exposure of these companies and found that they lack understanding of foreign exchange risk management methods. The fear of derivatives, like the KIKO affair, also keeps companies from using financial markets for hedging. The most commonly used exchange risk hedging product in Korea, foreign exchange risk insurance, does not fully meet consumer demands and was even removed from the market during crises.