Asia Pacific: Micromanaging risk

Author: | Published: 9 Dec 2014

Countries across the Asia Pacific are trying to manage domestic companies' foreign currency exposure. It's prompted not only by rumours that the US is considering ending quantitative easing, but also the European Central Bank's plans to embark on a similar bond buying programme.

Many countries were scarred by their experiences in the 1997 Asian financial crisis, in which US interest rates rose in response to domestic inflation. That affected foreign exchange rates, which subsequently hurt Asian corporates who had borrowed heavily in foreign currencies without hedging their exposure. Ultimately...