Considering the fact that Korean economic structure, marked by its strong dependency on trade, is highly exposed to the dollar as an international currency export corporations have managed a-foreign-exchange-related risks by utilizing a various hedge tools. And one of them is Foreign Exchange Risk Insurance(FERI) of KEIC(Korea Export Insurance Corporation).
A refund, however, caused by FERI in the form of a forward exchange was up to 2,076.9 billion won in total from 2008 to 2009 August. Thereby the exporter's burden of loss due to a high foreign-exchange rate has been aggravated.
This research mainly examined the cause of the exporter's abated loss and tried to find out whether it resulted from external effects such as the unrest of foreign exchange market or from just operational problems of FERI.
The results confirmed that there were loopholes in operating the system as follows: Contract transactions were not based on actual export records; Insurance deals exceeded the limit of 200 percent. As results, the losses of both KEIC and export corporations to cause speculative transactions for a foreign-exchange profit had been increased.
This report suggests a system with the limit of transaction corresponding to an actual demand for hedge while running a foreign-exchange insurance, which could block out transactions of speculative purpose.
A refund, however, caused by FERI in the form of a forward exchange was up to 2,076.9 billion won in total from 2008 to 2009 August. Thereby the exporter's burden of loss due to a high foreign-exchange rate has been aggravated.
This research mainly examined the cause of the exporter's abated loss and tried to find out whether it resulted from external effects such as the unrest of foreign exchange market or from just operational problems of FERI.
The results confirmed that there were loopholes in operating the system as follows: Contract transactions were not based on actual export records; Insurance deals exceeded the limit of 200 percent. As results, the losses of both KEIC and export corporations to cause speculative transactions for a foreign-exchange profit had been increased.
This report suggests a system with the limit of transaction corresponding to an actual demand for hedge while running a foreign-exchange insurance, which could block out transactions of speculative purpose.