Time-varying foreign currency risk of world tourism industry: effects of COVID-19

The effect of excessive volatility in world market currencies caused by COVID-19, especially on the tourism industry, is pervasive. This paper examines the foreign currency risk of 131 tourism firms from 19 countries during the period of the COVID-19 pandemic and compares it with the pre-COVID-19 period to analyse the time-variation of firms' exposure. The study provides evidence that firms face significantly higher currency risk during this pandemic, whereby firm-specific variables, such as operational efficiency, leverage and hedging, are significant determinants of firms' currency risk in the tourism industry.

Automated summary

The study found that tourism firms face significantly higher currency risk during the COVID-19 pandemic, with firm-specific variables such as operational efficiency, leverage and hedging being significant determinants of these risks in the industry.