This paper examines the optimal production, export allocation and hedging decisions of a risk-averse international firm … each currency. Then, both production and export allocation are separable. Hedging with forward contracts depends on risk … exchange rate risk plus noise, there is a conflict between cross hedging and taking a basis risk. If, alternatively, the …

optimal hedge ratio given the outcome of past hedging decisions and future expectations. The model implies that the optimal … 2015 and find strong evidence for the model's predictions. By adding a dynamic regret approach to the hedging and FX … literature we shed further light on the rationale behind selective hedging. …