Abstract
This study estimates the exchange rate exposure of Korea Exchange firms due to changes in the CNY/USD exchange rate and analyzes its characteristics. The value of Korea Exchange firms decreases when the value of CNY decreases (when the CNY/USD exchange rate rises). More importantly, the sample firms are more exposed to CNY/USD exchange rate changes than the firms are exposed to KRW/USD exchange rate changes. The markup adjustment coefficients which were estimated from the relationship between CNY/USD exchange rate changes and USD-based export price changes suggest that firms' exposure to CNY/USD exchange rate changes is associated with export price adjustments of Korean firms due to exchange rate changes. The main results of this study suggest that for Korean firms, foreign exchange rate exposure to the CNY/USD exchange rate is greater than exposure to changes in the KRW/USD exchange rate, implying that Korean firms need to pay more attention to the changes in the RMB exchange rate and the developments of the Chinese market.
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