Economics, Econometrics and Finance
4 years ago

Emerging market firms at risk as currency depreciation hits cash balances.

RePEc: Research Papers in Economics
Currency depreciation and emerging market corporate distress
Valentina Bruno, Hyun Song Shin

Paper Summary

Emerging market companies that borrow in US dollars and keep cash reserves are more at risk when their local currency loses value. It's not just the foreign debt that's the problem, but also the cash they hold in dollars. This means that when the US dollar gets stronger, these companies are in trouble.

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