Emerging markets and currency exposure: firm performance analysis in Mozambique.

Abstract

This paper conducts a firm-level analysis of the impact of the exchange rate depreciation of Mozambican Metical (MZN) to South African Rand (ZAR), Dollar (USD) and Euro (EUR) on investment. The analysis makes a comparison between domestically and foreign-owned companies given the Mozambican business environment with access to credit particularly constrained, the Stock Exchange still in a development phase, and the lack of ability in implementing effective hedging techniques. I expect foreign-owned firms to perform better when compared to the domestic companies in terms of profitability and efficiency, which would be explained by the greater parent companies’ ability to face general exposures and currency risk in particular