A Study of the Use of Foreign Currency Derivatives in the Korean Shipbuilding Industry

The exchange rate volatility during the global financial crisis in 2007–2009 led Korean shipbuilding companies to face currency risk. The use of foreign currency derivatives to take a risk in financial exposure affects them significantly. This research analyzes how the use of foreign currency derivatives affects the Korean shipbuilding industry in relation to its foreign sales by company type and over time, especially before and after the crisis period. It is based on statistical data presented by KOSHIPA and KOSIC in 2001–2014. The results of the analysis show that there is a significant relationship between foreign currency derivatives and foreign currency exposure for all firm sizes and years, but no relationship between them overtime .