We estimate the time-varying co-movements of a large set of bilateral exchange rates/the RMB and explore their relationship with the firm-level exchange rate exposure in China. We find that firms’ exchange rate exposure increases in periods of high exchange rate co-movements. The co-movements...

This study examines the impact of political connections on a firm’s foreign exchange rate exposure. Using a sample of 2,204 Chinese listed firms from 2005 to 2018, we document that politically connected firms have less exposure to exchange rate risk than their otherwise identical non-connected...