Optimal hedging decisions for Taiwanese corn traders on the way to liberalisation

This paper examines the impacts of exchange rate risk on Taiwanese traders' decisions to hedge corn imports on US futures markets. The results yield t he conclusion that, in the absence of a market that provides proper tools t o hedge against exchange rate risk, the Taiwanese economy is incurring an o bservable social loss. Thus, further liberalisation is essential. Taiwan's experiences can serve as an example for developing countries, as the world economy is becoming increasingly integrated. (C) 2001 Elsevier Science B.V. All rights reserved.