A research study Submitted in partial fulfillment of the requirements for the degree of Master of Business Administration

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2012

The fluctuation of the Baht has affected the revenue s of Thai manufacturing firms. A currency hedging is an important instrument to minimize foreign currency exchange fluctuation risk . Although currency hedging instruments have been developed in Thailand for a decade, there is no clear evaluation whether such instruments can generate the benefits to manufacturing firms in the country. T his study aims to explore th is issue by using two main industries, electronics and processed food industries , as case studies . T hree key different firm characteristics , i.e. firm size, firm operation and, firm age are considered within these two industries . This research capture s currency hedging behavior s of 18 manufacturing firms in Thailand. The main investigation s demonstrate that 1) processed food firms are more likely to use derivatives against foreign currency risk than electronic firms , 2) large firms are more likely to us e derivative and operational hedging instruments than small firms 3) international firm s are more likely to use derivative and operational hedging instruments than domestic firms and 4) older firms are more likely to use derivative and operational hedging instruments than younger firms. Moreover, t he lack of knowledge on currency hedging tool and financial problem tend to be important obstacles for small firms in conducting derivatives . In conclusion, policy inferences are made to improve currency hedging market in the future.